Expert commentary: US will lose to China in technology war because sanctions are a double-edged sword

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Expert commentary: US will lose to China in technology war because sanctions are a double-edged sword

Companies from China, which to one degree or another achieve commercial success outside the country, are often the target of US sanctions. Huawei Technologies, ByteDance with its TikTok service, and more recently also SMIC – the list of examples can certainly be continued. At the same time, experts believe that the United States at this stage is not ready to invest in the development of national production.

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The administrative resource at this stage works efficiently and does not require special investment. Huawei first lost the ability to receive HiSilicon processors from TSMC, and now the United States is ready to prohibit the supply of any components made using American technologies or equipment to the Chinese giant. So that Huawei does not casually seek shelter on the conveyor belt of the Chinese contractor SMIC, the latter’s activities have recently also come under the critical eye of American regulators.

As CSIS expert James Andrew Lewis admits, the US approach to maintaining its technological hegemony cannot be called forward-looking. Lewis himself in the past worked in the US Department of Commerce, so he has some moral right to reason about such matters. The expert believes that the biggest problem of the United States in this confrontation with China is the lack of desire on the part of the American authorities to spend serious funds on the development of national production. Relevant initiatives are indeed being discussed by the government, but they still remain mostly on paper, and the amounts put into the projects seem ridiculous.

A CSIS spokesman explains that China could overtake the United States in terms of investments in the semiconductor industry by three orders of magnitude, in a 1000-to-1 ratio. This imbalance does not leave the best chances for the United States to win this race. Of course, China is still a decade behind the United States in terms of high-tech development, but the motivation of the Chinese authorities to close this gap should not be underestimated. As soon as the US pressure on private companies from the PRC increased, local authorities began to invest much more actively in the development of the national semiconductor industry. The same SMIC began to receive large subsidies for the development of new technologies and the expansion of production. By the middle of the decade, China expects to master 7nm lithography, and major domestic market players such as SMIC and YMTC are preparing to test production lines.

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China has realized, according to Lewis, that global technological leadership increases its influence on the international stage, and therefore is unlikely to give up its ambitions to occupy the top of the hierarchy. In this sense, the United States itself suggested to its political opponent the vector of development, but so far it does not realize the full vulnerability of its position at the current levels of funding.