The US has banned the shipment of vital semiconductor components and technology to China, thwarting Beijing‘s attempt to overthrow Washington as the world’s largest economy comes under ‘unprecedented’ pressure.
Despite having the best industrial production capacity in the world, Washington‘s containment approach against emerging technology makes it an easy victim to key technologies like China‘s Achilles’ heel. Chinese President Xi Jinping‘s plans to make China the world’s leading digital power and pass the US to become the world’s largest economy may not succeed.
China’s Potential Leadership is Shackled by the US Intervention
According to Jun Zhang, a lecturer in economic geography at the University of Toronto, “The current economy is built on chips. According to a rough calculation, one yuan’s worth of chips is capable of supporting 10 yuan’s worth of electrical capacity and producing 100 yuan’s worth of economic activity.” The professor said that China is under extraordinary strain from the US and that the level of US containment will have some bearing on how competitive China will be.
The bipartisan Chips and Science Act of 2022, meantime, was signed into law by US President Joe Biden in August in order to support American semiconductor development with federal subsidies of USD 52.7 billion.
The EU, Japan, and the US are all Competing Against China and Each Other
In October, the US government considerably increased the number of technology restrictions it had placed on China, putting a particular emphasis on cutting-edge semiconductor chips, chipmaking software, and tech expertise, according to The Star.
When the US teamed up with the Netherlands and Japan last month to restrict the delivery of cutting-edge chipmaking equipment to China, the containment measures were hastened. The European Union (EU) is anticipated to enact the EU Chips Act later this year, which will further exacerbate the problem. The law aims to increase Europe’s portion of the world’s chip production capacity to about 20%.
No official assessment of prospective economic losses has been provided by Beijing, but it has blamed Washington for abusing its market dominance, as China could potentially have taken the lead if not for the sanctions.
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