The Biden Administration is considering restricting the export to China of computer chips necessary for artificial intelligence programs, according to reporting from the Wall Street Journal. The potential controls would ban the export of less-advanced versions of the most advanced flagship chips, which were developed in response to restrictions already placed on the flagship chips last year. If implemented, the new sanctions would re-inforce a commitment to limiting economic co-operation, particularly in the technology sector, despite a broader attempt to calm the current tensions.
No American official agreed to speak publicly on the not-yet-policy, though national security advisor Jake Sullivan has previously described the administration’s aim as “protecting our foundational technologies with a small yard and a high fence” (meaning limiting sanctioned items to the most crucial technology but strictly enforcing those small number of sanctions). Nvidia, the company perhaps most affected by the proposal, responded to the report with an expectedly defiant statement; chief financial officer Colette Kress warned that the restrictions would “result in a permanent loss of opportunities for the U.S. industry to compete and lead in one of the world’s largest markets.”
Nvidia’s stock price fell more than 2% immediately after the Wall Street Journal report’s publication.
The export restrictions, if implemented, would be just the latest in a string of enforcement actions by Western governments designed to limit Western companies’ involvement in China, especially its technology sector. Along with the sweeping ban on flagship chips in October 2022, the 2021 CHIPS Act bans any actions that would benefit the Chinese semiconductor industry by corporations receiving funds designated by Congress.
This shift in policy is a stark contrast to the status quo which has stood from Nixon to Obama. Economic integration, this status quo thinking went, would forge a relationship between the two countries, create a democracy-demanding middle class in China, and create a mutual deterrent to conflict as the economic damage would be seen as untenable. However, as Washington began to fear Chinese hegemonic aspirations and as the potential for conflict became more real, economic integration began to be seen as a threat to American national and economic security.
Thus, American and European governments have been breaking away from the Chinese economy. Many have inferred that these governments are aiming for an economic decoupling, meaning the removal of all possible presence in the Chinese economy. Under a regime of decoupling, the damage to Western economies, some argue, would be less disastrous when conflict occurred, as the many Western businesses reliant on the Chinese economy would have already been forced to either find a non-Chinese alternative or to close. Officials, however, have been carefully referring to these actions as “de-risking” key sectors. Whether properly defined as de-risking or decoupling, there is an underlying assumption that China and the United States are engaged in an economic and diplomatic competition that has the potential to become a military conflict, and, therefore, that pulling back economic co-operation in sectors key to this competition is a necessary step in limiting the available resources China can use in the eventual war.
Some argue that Western economic removal is necessary to prevent China from gaining hold of American military and commercial technology, which is often stolen and copied to stay on par with U.S. advancements, thereby limiting the extent of any possible violence. Others rebut that withdrawing from the Chinese market removes a key deterrent for conflict, ensuring that otherwise preventable violence will occur. Either way, this control of computer chip exports will likely not be the last economic restriction the U.S. places on its trade with China. As it becomes ever clearer that an adversarial relationship between the two nations is here to stay, the ability to stymie Chinese advancement is sure to remain a key goal of American policy.
- U.S. Surveillance Changes Lead E.U. To Approve Data Sharing Agreement - September 13, 2023
- Wagner Forces In Africa Reduced: Who Has Feet On The Continent? - August 27, 2023
- Biden Considers “Dumbing Down” China’s A.I. Development Through Export Controls - August 13, 2023