Posted: 03.04.2024 13:10:00

Chip is no rescue ranger

Global shifts — China is gaining momentum and crowding out the United States in the field of high technologies

Washington, trying to maintain its dominance on the planet, is leading to an aggravation of the situation in Asia, with China being the primary target of all kinds of American attacks. The clash is ongoing both in politics and in the technological sphere. The intensification of the struggle is due to a change of roles — it is the People’s Republic of China now that sets global trends, while the United States is trying to prevent Chinese companies and the public sector from consolidating their achievements and moving further. 

                               The President of Belarus,
                           Aleksandr Lukashenko,

“We are very interested in China being a strong power, so that China develops. This is not only our interest: the whole planet is interested in this, since a huge number of talented and hardworking people live here [in China].”

During the talks in Beijing with Chinese President Xi Jinping, on December 4th, 2023

The passion of networks

In March, the driving force of the confrontation was the situation around Washington’s attempt to take the ultra-popular TikTok short-form video-sharing social network under its control, or, in case this attempt fails, to ban the resource on the entire territory of the country. The idea does not shine with novelty, though. As the owner of the Oval Office, Donald Trump tried to remove the app from all American online stores. There were signed decrees banning Americans from doing business with ByteDance (TikTok creator) and Tencent (WeChat messenger creator). However, before it came to practical implementation, the year 2020 came and the US president did not have time to proceed on the issue before the scandalous presidential elections in November. Joe Biden, in turn, who typically for Democrats views Russia as a much greater threat to America than China, put the idea of banning TikTok on the back burner.  
Yet, as the election nears, the Biden administration has decided to start hyping up the Chinese theme, especially considering the fact that the current owner of the White House failed to hold constructive talks with China’s President Xi Jinping in San Francisco. 
Thus, Washington has predictably cracked down on TikTok with its total global audience of 1.21 billion users, 170 million of whom live in the United States. Realising that the US would not be capable of creating anything similar in terms of functionality, number of subscribers and, most importantly, popularity, the American authorities have conceived to simply take away the local segment of the social network from the owner company. The trial balloon was launched in Montana, where Governor Greg Gianforte banned TikTok from January 1st, and prohibited the Apple App Store and Google Play Store from offering the app for download to customers. 
A new round of struggle for minds and hearts has led to the fact that the US House of Representatives has passed a bill forcing ByteDance to sell the American segment of TikTok to local IT companies within six months, or else it will face a total ban throughout the United States, like it was done in Montana. Biden, if approved by the Senate, has already promised to sign this bill. The Chinese Foreign Ministry rightly noted that this step would ‘undermine the confidence of foreign investors, including from China, in the North American country’. The official representative of the Ministry, spokesman Wang Wenbin, stressed, “This kind of bullying behaviour that cannot win in fair competition disrupts companies’ normal business activity, damages the confidence of international investors in the investment environment, and damages the normal international economic and trade order.” Ordinary citizens of the United States are not impressed with the TikTok ban, either. Americans are massively recording videos accusing the authorities of arbitrariness. 
Why is Biden fighting social media? First of all, Washington is dealing this way with Internet platforms that are not under its control. After all, the November elections are on the horizon.  
The fact is that American companies cannot create their own TikTok analogue, which unnerves the elites and, above all, the Democrats, who are losing influence on the traditional youth electorate. At the time when Trump is actively gaining ground with voters under the age of 30, as well as African- and Latin Americans, the Democratic Party does not have a tool that would allow it to regain advantage in these social groups. That is why it is twisting the arms of the ByteDance management, compelling the company to divest its ownership of the business.

When sanctions make the sanctioned stronger

Equally heated battles are unfolding in the field of semiconductor manufacturing, which is another important front of the China–US high-tech rivalry. The chip war between Beijing and Washington has been going on for years, and its next round began in October last year, when new export restrictions were imposed on the supply of semiconductors to the People’s Republic of China. The ban applies to chips used in the developments related to artificial intelligence, as well as equipment for the production of the most advanced microcircuits. By doing so the United States is trying to artificially limit the development of high-tech sectors of the Celestial Empire’s economy and to prevent the penetration of cheaper and more powerful processors from China into the US market.
Same as in the situation with sanctions against Belarus and Russia, the anti-Chinese ban has become a classic ‘shot in its own foot’. 
On the one hand, American chip manufacturers such as Nvidia have suffered. One of its main markets was China, and now powerful processors cannot be supplied there due to the newly imposed sanctions. 
On the other hand, the dynamically developing Chinese industry needs more powerful chips. In this regard, China, which is already trying to develop import substitution programmes, has accelerated the rate of development and procurement of domestic products. Thus, it is known that Baidu bought Huawei’s AI chips worth several million dollars, as an alternative to Nvidia amid US export restrictions. Another giant, Tencent, is actively looking for local suppliers. Scientific work does not stand still, either. In December 2023, ChangXin Memory Technologies made a technological breakthrough in the field of semiconductors, presenting a revolutionary concept of a transistor required for the development of a 3-nanometre processor. A week earlier, Huawei upset its competitors by introducing a laptop with a 5-nanometre processor, whereas previously it was believed that Chinese companies did not possess such technologies. Moreover, according to media reports, the major Chinese manufacturer of SMIC chips is about to launch mass production of such semiconductors displacing Taiwanese and Americans from the market.
Unable to deal any serious blow to the Chinese semiconductor industry on its own, the United States has traditionally decided to attract European and Asian allies to this end. In early March, Bloomberg reported that Americans were putting pressure on Germany, the Netherlands, Japan and South Korea to make them further tighten restrictions on the supply of equipment to China for the production of even 28-nanometre chips, not to mention newer models. Tokyo is also required to stop selling special chemicals to Beijing. That is, Washington aims to disrupt the work of all semiconductor-related industries in China, not just the production of smartphones. 
The United States seeks to curb investments in the Chinese economy and take control of supply chains, or even disrupt them altogether. A Chinese high-tech product has been declared a threat to the US national security, based on which the White House puts forward absurd and irrational demands on China. However, Beijing is not a whipping boy. In fact, restrictions for it are primarily growth drivers that enable faster import substitution and access to wider markets. An additional trump card for China in this situation is the fact that the United States is heavily dependent on supplies of a wide range of goods and services from the Celestial Empire, which allows having an effective counterargument to every attack by the US authorities.  

By Anton Popov