US-China tech war: Washington's curbs will only 'travel towards tightening' as national security trumps economics
Any easing of US tech restrictions on China will be an "uphill battle" due to national security concerns despite the recent resumption of high-level talks between Beijing and Washington, analysts said, as top chip firms urged the Biden administration to refrain from adding further curbs.
US Secretary of State Antony Blinken met with the CEOs of US chips firms Intel, Qualcomm and Nvidia on Monday to discuss supply chain issues and China's restrictions on the export of germanium and gallium, which are used to manufacture chips, according to the US Department of State.
Reports also suggested US Secretary of Commerce Gina Raimondo, National Economic Council director Lael Brainard and National Security Council director Jake Sullivan took part in the meeting.
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The Semiconductor Industry Association, a Washington-based trade association and lobbying group, on Monday also urged the Biden administration to avoid placing further restrictions on China and to allow the industry to have continued access to the world's largest commercial market for semiconductors.
"The Biden administration, and like the Trump administration before them, is justifying these controls on the basis of national security," said Nick Marro, the lead analyst for global trade at the Economist Intelligence Unit, adding that US chip firms are facing an "uphill battle".
"That rationale will always be tricky for companies to argue against, particularly these days, as US concerns around trade, technology and Taiwan increasingly characterise the downward trajectory in US-China relations."
The world's two largest economies have recently restarted bilateral talks, with visits to China by US Secretary of State Antony Blinken, Secretary of the Treasury Janet Yellen and climate change envoy John Kerry.
Beijing also remains open to a visit by Raimondo, who oversees trade issues related to China, including export controls on Chinese technologies that have strained bilateral relations.
A key concern for semiconductor companies in the latest bilateral talks was how far Washington would continue to contain China's access to advanced technology, including further export controls to restrict the sale of some artificial intelligence (AI) chips to China.
The US is also mulling restrictions on investment in China's tech industries, including chips, AI and quantum computing.
Marro said US efforts to persuade Japan, the Netherlands and other markets to impose similar export restrictions on China reflects concerns that the existing measures are insufficient in stymieing access to certain types of advanced chips.
"The direction of travel is towards further tightening, not less," Marro added.
In October, US President Joe Biden issued a sweeping set of rules designed to freeze China's semiconductor industry, while the US pours billions of dollars in subsidies into its own industry.
The Semiconductor Industry Association also called on both governments to ease tensions and seek solutions through dialogue, not further escalation.
"Our actions have been carefully tailored to focus on technology with national security implications, and designed to ensure that US and allied technologies are not used to undermine our national security," the White House National Security Council said, according to Reuters.
China's Ministry of Commerce announced its curbs on gallium and germanium from the start of August earlier this month to safeguard "national security and interests" in a move viewed as retaliation for US-backed sanctions on the Chinese semiconductor industry.
Macquarie Group said on Friday that it would be difficult for China and the US to resolve structural issues in the bilateral relationship even as more high-level talks are expected.
"Going forward, the US will continue to de-risk and China will stick to self-reliance. The long-awaited executive order restricting US tech investment in China, as well as the export restriction on AI chips, could be rolled out later this year," Macquarie Group said.
"After imposing export controls on two rare earth metals recently, China might retaliate with other measures."
Ministry of Foreign Affairs spokeswoman Mao Ning said on Tuesday that China hoped that the US would create a "favourable environment for China-US economic and trade cooperation".
Ning also reiterated China's opposition to "US politicising and weaponising trade and science-tech issues".
This article originally appeared on the South China Morning Post (SCMP).
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