Title
  America’s Economic War against China is Failing
Subtitle
  US-China Economic Rivalry
Date
  7 August 2921
Register Date
  2021-08-10
Count
  9

   
 
 
 
 
 
 
 
 
 
 
 
 
 
America’s Economic War against China is Failing
AUGUST 7, 2021

by Tom Fowdy
is a British writer and analyst of politics and international
relations with a primary focus on East Asia.

American attempts to stifle China’s technological progress in
order to ‘win 21st century’ are failing
Aerial view of road intersection in Shanghai at night. © Getty
Images / Kosamtu

The US, stuck in the ideological stereotype that ‘Communist
states can’t innovate,’ has vastly underestimated China’s
technological resolve and jumped head first into a contest that
is a lot harder to win than Washington believed.

A new study by Harvard’s Growth Lab has found that “the
technological level of China’s exports increased through the
trade war with the US, according to a new ranking, which predicts
the Chinese economy will grow faster than India’s over the next
decade.”

It further states that the “complexity of China’s exports” has
rapidly caught up with that of the US, from being half that of
its rival 20 years ago to a near parity now. The study also
suggests China is overcoming the impact of Washington’s tariffs
and technology wars against it, an effort by the US which has
been relentless, by increasing its high-tech exports to other
regions.

Growth Lab manager Tim Cheston is cited by Bloomberg as saying
that “Chinese exports are now at the level of having nearly
filled all known areas of global products.” Their primary goal
now is to “move from taking know-how from across the world, into
true innovation,” he adds.

The study comes amid growing pressure from American business
leaders and groups to remove tariffs on China, claiming that
these have been damaging, a claim which was swiftly dismissed by
the White House.

The study’s findings nicely illustrate the predicament the US
faces, and why, for that matter, it is so obsessed with
blacklisting Chinese firms and attempting to block their rise in
high-end technology. However, it is also a sharp indication that
those efforts are not yielding results, and will not slow down
China’s growth trajectory. What we are seeing now is a
phenomenonwhereby China “moves up the global supply chain”
through increasing technological prowess, not out of it, as some
would hope.

While China is always known for manufacturing and exports, the
term ‘Made in China’ has traditionally, albeit misleadingly,
represented a cheap, low-end product of a poor quality. But that
doesn’t quite capture the fact that not only is such discourse
an orientalist stereotype, but undercuts and seemingly misses the
transformation taking place in China’s own manufacturing and
industrial capabilities over the past two decades.

The ‘what’ that China makes is changing, and this serves to
undercut the industries which America traditionally dominates.
This is why Washington has responded to the new geopolitical
environment with a tidal wave of protectionism, and a new-found
appetite for home-grown industrialism.

US President Joe Biden says he wants to “win” the 21st century
and ‘own the technologies’ of the future, precisely because it
is feared that China’s progress will eventually take that from
them. His recent comments concerning cyberattacks came with a mix
of bellicosity and condescension, showing how this fear of
Chinaincreasingly shapes the national mindset.

As a result, America’s technological war against China has been
ferocious. The Biden and Trump administrations have forcibly
weaponized the semiconductor supply chain to blacklist hundreds
of Chinese technology firms in their bids to prevent these from
accessing critical components the US feels it wields advantages
in, while others have been slapped with investment bans to
prevent US capital reaching them.

The most notable target of all these actions has been Huawei and,
in the midst of it all, China has quickly recognized that itmust
race to self-sufficiency in semiconductor supplies in order to
counter America’s bottlenecks and continue its development. The
ability to produce high-end technology is ultimately the key
between an advanced economy and a developing one, because it is
“top of the value chain” – herein is what America hopes to cut
off.

I like to think of South Korea as a model of what China’s
economy will ultimately emulate, should it succeed. You have your
leading technological conglomerates – Samsung, Hyundai and LG.
They all produce sought-after critical semiconductor and chip
technology, which is used to produce a range of compelling
electronic products which dominate Korea’s economy, including
computers, home appliances and smartphones. This creates a
circuit of consumption, innovation and high-end production that
drives Korea’s economy forwards, allowing it to rapidly become a
high-income economy.

As a clear example, China’s semiconductor industry is
increasingly overcoming hurdles. China has recently mastered the
production of42-, 28- and 14-nm chip nodes, the latter of which
is still sufficient to power the vast majority of electronic
devices. The first China-made lithography machine is expected to
debut later this year, showing they are already on the ‘ladder’
towards catching up to established players, and breaking free
from the Dutch manufacturer ASML. As a different example, one
should note how China’s own space agency, founded only in 1993,
is in the process of leapfrogging NASA by proposing a Moon Base
with Russia by the 2030s, as well as a human mission to Mars.

To put it lightly, the US has, arguably, vastly underestimated
China’s own technological resolve and jumped head-first into a
contest that may be a lot harder than they believe. Finally, one
should realise that Chinese civilization was one of the greatest
early innovators in human history, establishing many things the
west had yet to learn. Only a myriad of ideological and racist
stereotypes is blocking the west from recognizing China’s rapid
technological advance, and US policies to disrupt it are not
yielding results. America might be best focusing on its own
capabilities.

* 2020 : U.S. trade in goods with China
NOTE: All figures are in millions of U.S. dollars on a nominal
basis, not seasonally adjusted unless otherwise specified.
Details may not equal totals due to rounding. Table reflects only
those months for which there was trade.

Month Exports Imports Balance
January 2020 7,153.7 33,173.3 -26,019.6
February 2020 6,828.4 22,720.9 -15,892.5
March 2020 7,900.4 19,789.1 -11,888.7
April 2020 8,624.4 30,922.8 -22,298.4
May 2020 9,671.6 36,551.7 -26,880.0
June 2020 9,236.6 37,495.1 -28,258.4
July 2020 9,088.3 40,658.0 -31,569.6
August 2020 10,961.7 40,791.5 -29,829.9
September 2020 11,497.7 41,194.3 -29,696.6
October 2020 14,773.1 44,779.2 -30,006.1
November 2020 14,219.7 44,839.3 -30,619.6
December 2020 14,529.6 41,833.7 -27,304.1

TOTAL 2020 124,485.4 434,749.0 -310,263.5