The Chip Alliance and Chip War is just like the proverbial saying of
'killing the goose that laid the golden eggs'. The USA and its allies
can stifle China on Chip technology, but now it looks like the USA
cannot help its own domestic not to mention allies in the chip industry
without China's unrestricted supply of rare earth elements.
China
had been fueling the demand by the global chip manufacturing industry
with their rare earth elements for decades and is breaking that
tradition going forward. As China's own priority is now extending into
being self sufficient in domestic chip manufacturing, it is therefore
timely and logical for it to keep rare earth elements sufficient for its
own use. That is killing two birds with one stone - restricting
supplies to others and conserving it to serve rising domestic demand.
The
days of China not retaliating are over, starting from Trump's trade
war. Every action now will meet with a reaction that is going to be more
devastating than expected. The irony is that it is those countries that
followed the USA blindly eg in the Ukraine War that are suffering the
most, while the USA is benefiting from the misery of Europe.
Just wait for the winter of discontent coming into focus soon, if it is severe and not mild like in 2022.
Anonymous
China must adopt the paramount mindset of looking after its own interests first. China must not follow the EU, blindly being waylaid by looking after the interest of the USA by following its dictates in the Ukraine War. The biggest folly of the EU was antagonising Russia by following sanctions instigated by the USA, even to the extent of hollowing out its own manufacturing base, now due to unavailability of cheap Russian energy.
ReplyDeleteWho has been benefiting from the misery of EU de-industrialisation? The USA of course, by killing the Nord Stream pipeline's operation, and opening up the EU energy market instead to mainly expensive USA linked energy suppliers. Companies moving to USA with the Inflation Reduction Act, a sinister measure meant to lure EU companies to relocate to the USA was the other vile motive. The EU is paying the ultimate price.
Of course China also benefits, with many EU businesses moving to China for example, to take advantage of the cheaper energy environment and the important Chinese market. But why are the EU countries complaining mostly about the 'Inflation Reduction Act' as an attempt to de-industrialise Europe and not protesting against China even with companies moving over there?
China never had to resort to unfair trade practices like the 'Inflation Reduction Act', unlike what the USA does, just to musk its sinister motives. China never forced BASF or Airbus to relocate their main or expanded production lines to China. Everything was voluntarily done, with even the CEOs of those companies, not to mention Olaf Scholz and Emmanuel Macron, flying all the way to China together with them to ink those deals.
This is also just the exact motive of the Chips and Science Act enacted principally to cripple China's technology sector from overtaking the USA. The Chips4 Alliance was formed to enhance sanctions against China, which some analyst are saying will only work on paper. Now we can see why it will not work, with China restricting rare earth elements and export of important technology.
This may sound odd, knowing that China was never thought of as being in the forefront of technological innovation in the past. But over the years, China has overtaken the USA in the field of high tech patents and scientific papers, and you can be sure there are important sectors that China is now ahead and therefore necessary to keep them away from the West.
China's retaliation could be argued as telling the USA and the West that China is no longer going to be the punching bag of the USA and the West, just like the Brits and Poles are now telling the Ukrainians that it is exhibiting ungrateful behavior for all the help given to it so far. It is as if Ukraine is the most important country for Nato, and demands support from everyone without gratitude. Russia helped the EU countries, particularly Germany and France to industrialise and become what they are today (not tomorrow), but that has also been repaid with ingratitude. Countries are now realising that enough is enough.