Isolate China? "Biden Economics" faces multiple boycotts from China | Chips | Biden

On June 14, Beijing time, Chinese State Councilor and Foreign Minister Qin Gang held a telephone conversation with US Secretary of State Brinken at request. During the call, Qin Gang emphasized that the US should stop using competition as a pretext to harm China's sovereignty, security, and development interests. In fact, the recent series of US policies towards China in the fields of economy, trade, and technology have caused dissatisfaction and opposition from all parties.

Foreign media: The US government is considering extending the "exemption period" for chip export controls to China

According to the Wall Street Journal on the 12th, the Biden government intends to extend the exemption period of the US chip export control policy, so that major chip manufacturers in South Korea and Taiwan, China can continue to import semiconductor manufacturing equipment and maintain production and business activities in Chinese Mainland.

According to the US export control policy issued in October 2022, advanced chips and chip equipment are strictly restricted. TSMC, Samsung Electronics and SK Hynix and other enterprises have to apply to the US Department of Commerce for a one-year exemption period before they can continue to import equipment to maintain the normal production and maintenance of Chinese Mainland factories.

Analysis: The US Extends the "Exemption Period" of Chip Export Control with the intention of wooing South Korea

For Korean chip companies, the production capacity of Chinese factories accounts for a relatively high proportion of their overall production capacity. Data shows that Samsung Electronics' Xi'an factory accounts for 40% of its NAND flash memory production, while SK Hynix's Wuxi factory accounts for 48% of its total DRAM memory chip production.

In contrast, TSMC has a lower proportion of production capacity in mainland China. Currently, nearly 90% of TSMC's production capacity is concentrated on the island. Therefore, the extension of the exemption period by the United States has a strong intention of wooing South Korea.

The Ministry of Foreign Affairs: The US crackdown on Chinese enterprises is hysterical and resorting to any means possible

Export controls are increasingly becoming the most important policy tool for the US government, and the US side's excuses are constantly being updated. On the 12th local time, the US Department of Commerce added 31 Chinese companies and institutions to the "Entity List" on the grounds of recruiting Western pilots to train Chinese military personnel, developing hypersonic weapons, and human rights. These 31 entities involve advanced computing and aerospace fields.

In response, the Chinese Ministry of Foreign Affairs stated that China firmly opposes the above-mentioned measures by the United States and demands that the US immediately correct its erroneous practice of politicizing, instrumentalizing, and weaponizing economic, trade, and scientific and technological issues under the guise of military and human rights issues, and stop abusing export control tools such as the "physical list" to contain and suppress Chinese enterprises.

The White House: The pursuit of beauty over competitors: "The greater the leading advantage, the better"

Since the Biden administration took office, there have been frequent and vigorous actions in the field of technology against China. Some experts believe that the US technology policy towards China has undergone structural changes: US National Security Assistant Sullivan has previously made it clear that the US goal in key technologies such as advanced chips will shift from maintaining a "relative advantage" with competitors to "the greater the leading advantage, the better.".

Foreign media: Competition with China is the main axis of the Biden administration's economic, trade, and technology policies

Since April this year, several senior US officials have elaborated on the Biden administration's economic, trade, and technology policies on various occasions. The Wall Street Journal describes this set of policies as "Biden economics", which mainly includes strengthening state intervention, formulating industrial policies, building diverse and resilient supply chains through alliances and partners, and ensuring that cutting-edge technology does not leak out through the "small courtyard high wall" model.

Financial Times columnist Gideon Rahman believes that strategic competition with China is a major theme that runs through Biden Economics, especially after the G7 Hiroshima summit in May, when the United States and its major allies seem to have reached a consensus on "risk reduction" towards China. But various signs indicate that the so-called "consensus" is just an illusion.

Australian Minister of Trade: Not decoupling from China or removing risks from China

Australian Trade Minister Farrell recently stated that Australia is neither seeking to decouple from China nor seeking to de risk China. Australia hopes to continue exporting goods to China. The data shows that the bilateral trade volume between China and Australia exceeded 200 billion US dollars in 2022.

Australia is China's eighth largest trading partner, while China is Australia's largest trading partner, export market, and source of imports. China mainly exports mechanical and electrical products, computers, clothing, textiles, toys, etc. to Australia, and imports iron ore, coal, wool, barley, etc. from Australia.

New Zealand Prime Minister: China relations are the most important foreign relations

In addition, New Zealand Prime Minister Hopkins announced on the 12th that he plans to visit China at the end of June. Hopkins revealed that the delegation members come from multiple fields such as dairy products, tourism, and education. He emphasized that relations with China are New Zealand's most important and extensive foreign relations. Reuters believes that as a member of the Five Eyes Alliance, New Zealand's attitude towards China is worth paying attention to.

China is New Zealand's largest trading partner, export market, and source of imports for goods. Fonterra New Zealand is the world's largest dairy company, and its pre tax profit in Greater China increased by 12% year-on-year in the first three quarters of fiscal year 2023. The implementation of RCEP and the upgrading of the China Singapore Free Trade Agreement are the main reasons for the growth of Fonterra's trade with China.

European countries expressed concern about von der Leyen's "risk reduction" strategy

In Europe, the European Commission is scheduled to announce its economic security strategy on June 20th. According to the South China Morning Post in Hong Kong, Germany, France, the Netherlands, and Italy have expressed concerns about some clauses in the draft strategic document, especially those related to controlling investments in China. It is reported that this strategy is led and formulated by the President of the European Commission, von der Leyen. In March this year, it was von der Leyen who first proposed the concept of "risk elimination" for China. Some member states are concerned that the EU is too close to the United States in its policy towards China. A diplomat bluntly stated that we represent Europe, not the United States.

The survey results released by the European Commission on Foreign Relations this month show that 43% of European citizens believe that China is a "necessary partner" for Europe, surpassing the proportion who believe that China is a competitor or even an enemy. The think tank researchers believe that this shows that the European public is generally unwilling to "take risks" towards China.

Famous American Media Person: China Represents the Future

Famous American media personality and CNN host Farid Zakaria recently expressed through column articles and his own television program that American decision-makers must recognize that the attitude of the vast majority of countries and regions towards China is different from that of the United States, and for them, China represents the future.

Chinese Ambassador to the United States: Treating national security as a hammer and seeing everything as a nail

On the 7th local time, Chinese Ambassador to the United States, Xie Feng, was invited to attend the welcome event held by the National Committee on US China Trade for his inauguration and delivered a keynote speech. He said that using "risk reduction" as a cover for "decoupling" will bury more nails in China US relations.

Xie Feng said that the United States has included more than 1300 Chinese entities in various control and sanctions lists, and has introduced measures such as tariffs, export controls, and investment reviews. He asked, "Is it really possible to make the United States safer if the trade war is not over yet and there are also industrial and technological wars?"? Is it really in the interest of the United States?

American media: Building diversified supply chains through "multi shore outsourcing" between the US and Israel

One important aspect of Biden's economics is to build diversified supply chains, which the Wall Street Journal describes as "multi shore outsourcing": including the policy of relocating production capacity back to the United States, the "nearshore outsourcing" of relocating production capacity to Canada and Mexico, and the "friendly outsourcing" of transferring production capacity to so-called "friendly countries.".

Foxconn and Samsung are Affected by Vietnam's Electricity Crisis, Highlighting Infrastructure Shortcomings

Vietnam is one of the key priorities in the US strategy to reshape the global supply chain. Since May, Vietnam has been facing serious power shortages due to factors such as hot weather and a sharp decrease in river water levels leading to a sharp decrease in power generation. Hanoi, the capital city, temporarily turned off some street lights at night to save electricity. Many manufacturing enterprises have also been affected. According to US media reports, both Apple's main supplier Foxconn and Samsung Electronics' factories in northern Vietnam have received requests from local power companies to consider alternating power outages or at least reducing electricity consumption during peak periods.

The head of the South Korean Chamber of Commerce in Vietnam stated that electricity shortages have become a major issue faced by South Korean companies in their production and operation in Vietnam. The European Chamber of Commerce in Vietnam also wrote to the Vietnamese government earlier this month, urging them to resolve the electricity crisis as soon as possible. The Wall Street Journal believes that the current power crisis indicates that Vietnam still needs to solve some problems in order to compete with China and become a high-tech manufacturing base. In May, the Vietnamese government passed a new electricity development plan, aiming to increase power generation capacity to over 150 gigawatts by 2030, an increase of about 110% from current levels.

Guangxi supplying electricity to Vietnam after seven years will alleviate the electricity shortage in northern Vietnam

On May 23rd, Guangxi and Vietnam officially signed an agreement for the purchase and sale of electricity for the 110 kV Deep Trench to Mang Street Interconnection Project. This is the first time in 7 years that Guangxi has supplied electricity to Vietnam, which will greatly alleviate the power shortage in northern Vietnam.

Expert: The US's strong promotion of industrial chain restructuring is a zero sum game without winners