It's actually a "Seven Hurt Fist"!, The United States is the main player in China | China | the United States
The situation is pressing, and the United States has taken a tough stance on China.
On August 9th local time, US President Biden signed a long-awaited executive order restricting US entities from investing in China's semiconductor, quantum computing, and artificial intelligence sectors.
According to this executive order, US investors in related fields, whether private equity, venture capital, or joint ventures in China, must report investments that fall under restricted categories to the US Treasury Department.
According to the proposed implementation rules released by the US Treasury Department, it is proposed to prohibit transactions involving certain advanced technologies and products in the semiconductor and microelectronics industries, and to establish declaration requirements for other transactions; Regarding quantum information technology, it is proposed to prohibit certain transactions; For artificial intelligence technology, it is proposed to establish declaration requirements for certain technologies and products involving specific end uses, while prohibiting other transactions.
How much impact does it have on China?
Analysts believe that while this move by the United States may seem aggressive, its impact on Chinese related industries is not as significant as imagined.
Gao Lingyun, a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said in an interview with China News Agency's Guoshi Express that China has become a "must-have" for multinational corporations due to its huge market size and dynamic economy. Under the same risk conditions, capital always flows towards higher returns, which is an unbreakable economic law. Using administrative orders to artificially restrict the normal flow of capital may indeed have a certain impact on related industries in China in the short term, but in the medium to long term, capital will inevitably find new paths and methods to break through and continue to go where it wants to go.
Taking semiconductors as an example, as the world's largest semiconductor market, China is a strategic battleground for major semiconductor companies worldwide. In this situation, it is not easy to forcibly reverse the flow of corporate investment.
But it cannot be denied that this move by the United States will bring pressure to some Chinese startups, especially those in the fields of semiconductors, quantum computing, and artificial intelligence. However, the more this happens, the more it will force Chinese companies to abandon their illusions, catch up, and master more core technologies.
Can the United States withdraw completely?
The issuance of an investment review order against China has also caused harm to the United States itself and has even affected the world. It can be said to be a "seven injury fist" that first harms oneself and then others.
The first to bear the brunt is American companies. According to foreign media reports, executives from the three major US chip giants Intel, Qualcomm, and Nvidia had previously lobbied in Washington to oppose the Biden administration's expansion of restrictions on the sale of certain chips and semiconductor manufacturing equipment to China.
In Gao Lingyun's view, since capital inflows into China are inevitable, according to the new policy, if US entities continue to invest in China's semiconductor, quantum computing, and artificial intelligence fields through various channels in the future, the investment returns are likely to stay overseas and dare not return to the United States. Attracting the return of overseas profits from enterprises is precisely what former US President Trump strongly advocated. The repetition of this policy will have a significant impact on the normal operation and expectations of enterprises.
The national image and reputation of the United States will also be damaged. The United States has repeatedly politicized economic and trade issues and resorted to economic coercion, which has made more and more countries wary. Recently, many Latin American countries such as Argentina and Brazil have increased the use of the renminbi in import and export transactions, which is a clear example. Using economic and trade issues as tools and weapons will ultimately backfire on the United States itself.
The damage will spread to the whole world. Taking semiconductors as an example, the global semiconductor industry has formed a tight industrial supply chain, with the production of some cutting-edge chips involving thousands of processes and requiring over 70 cross-border collaborations. No country or region in the world can achieve self-sufficiency in semiconductors, and cooperation in the semiconductor industry chain is particularly important. Trying to artificially exclude China from the global semiconductor industry supply chain would be a huge blow to the entire industry.
A spokesperson for the Chinese Ministry of Foreign Affairs stated that this move by the United States seriously violates the principles of market economy and fair competition, seriously undermines the international economic and trade order, seriously disrupts the stability of global industrial and supply chains, and seriously damages the interests of China, the United States, and even the world business community.
Is it possible for the United Nations to decouple from China?
US officials also claimed to have had close consultations with allies and partners in advance, including members of the G7, the European Union, and the UK, and they will also introduce similar measures based on their own situation. Some analysts believe that this is to gather a group of Western countries to encircle and strangle China, and to firmly decouple from China.
In Gao Lingyun's view, the United States and Western countries are not "one piece", with various interests and contradictions. Within the EU alone, there are numerous obstacles to making a unified voice. In this situation, it is not realistic for the United States to decouple its economic and trade ties with China through alliances.
Some analysts also believe that whether decoupling can succeed depends on China itself.
Wang Wan, a director of the International Strategic Research Institute at Peking University, previously pointed out in an article that China's future position in the global industrial chain will ultimately be determined by its own development. The Chinese market is difficult to replace in terms of scale and growth. In the future, efforts should be made to build more innovative, high-value added, and resilient industrial and supply chains, and promote Chinese enterprises to climb towards the high-end of the industrial chain.
