Washington plays dirty over China chips

Setting back globalization when it does not suit its interests has become a hallmark of US policy

Employees monitor the chip-making production line at a tech company in Southwest China's Chongqing. (LIU HUI / FOR CHINA DAILY)

The United States recently unleashed sweeping new export controls on the sale of advanced semiconductor equipment to China, not just targeting one specific entity but the country as a whole. 

Worse still, the new restrictions made use of the “Foreign Direct Product Rule”, an act of extraterritorial unilateralism that not only prohibits American firms from dealing with the target but also extends to any third-party company or entity that utilizes any US intellectual property in its business dealings. 

Previously this move had only been used in reference to Huawei. But now there is this sweeping action which is poised to inflict colossal damage upon the global semiconductor industry supply chain and is a sign that hardliners continue to gain influence in the White House.

US foreign policy in the post-Donald Trump era is dedicated to destroying globalization when it does not suit US preferences. 

While for decades the US was a champion of free markets, free trade and unfettered capitalism, believing that such notions maximized its own ideology and influence, Washington now perceives that this globalized economic system has empowered rival states which have grown in stature but not succumbed to US unilateral hegemony as once hoped after the Cold War — namely Russia and China. 

The famous “end of history” thesis did not materialize, and as such, Washington no longer sees globalization as advantageous to itself. 

As a consequence of this, US foreign policy has now taken an inward turn. Its fundamental goal is to reassert its “lost” influence by exacerbating geopolitical conflict and undermining economic integration between rival states and allies it sees as its own rightful dominion. If there is peace and stability, the US will actively create a crisis. 

In other words, America perceives it cannot truly compete, therefore it must “hobble” others. In line with the Trumpian “America first” ethos, this process involves tearing up supply chains and economic links it deems “strategic”, promoting a process known as “decoupling” and attempting to build new US-centric alternatives in their place. 

In respect to both Moscow and Beijing, this process is being pushed in the fields of energy (such as oil and gas), renewable energy (such as solar panels), but also more specifically, high-end technologies, electronics, artificial intelligence and semiconductors. 

Since the Trump era, the US has made it its mission to try and hobble China’s development and technological advancement by progressively isolating it from the global semiconductor supply chain. The moves have grown more and more aggressive, with the latest act being an unprecedented escalation. While it attempts to tear down China’s chip industry and cut it off from advanced equipment, it is also strong-arming key semiconductor firms to build capacity in the US. 

The manner in which this is being conducted also reveals the coercive nature of US foreign policy — that is, if it cannot “persuade” allies to join in, then it will impose unilateral force upon them whether they like it or not. 

The latest “foreign direct product” rule restrictions come amidst a failure of the US to persuade other chip-making states to join a comprehensive alliance against China. This includes South Korea and Japan. US-led semiconductor restrictions pose a serious risk to the exports and market access of these respective countries in China. But the US does not care about their national interests. 

The imposition of the rule in response to allies’ willingness to cooperate follows earlier restrictions in relation to Huawei, which saw the United Kingdom forced to rethink its position after having initially rebuffed Washington’s demand to exclude the Chinese firm from the UK’s 5G networks.

In pursuing this path, the US is carving up the global economic system in the name of its own, strictly unilateral, national interests and is forcibly creating ideological blocs wherein it can wield exclusive political and economic dominance. 

For the global semiconductor supply chain, and for the prosperity of the world as a whole, this decision is disastrous. The US is an instigator, which will defend its hegemonic position at all costs, and for that matter, irrespective of the costs of others. Countries must be prepared to come together to defend the international economic order, which ironically created by the US, is now being purposefully destroyed by it.

The author is a British political and international relations analyst. He contributed this article to China Watch, a think tank powered by China Daily. 

The views do not necessarily reflect those of China Daily.