Joel Gehrke, Foreign Affairs Reporter
“The U.S.’s true intention ... [is] to fix China’s chipmaking on 28-nanometre, at least five generations behind the global leading edge of 3-nm to 14-nm,” Gerald Yin, the CEO of Advanced Micro-Fabrication Equipment, China, or AMEC, told a trade industry conference this week, according to the South China Morning Post. “We can’t accept [this].”
Yin’s anxiety stems from a restriction unveiled by U.S. officials last October, when the Commerce Department published an array of new rules curtailing Chinese access to U.S. semiconductors. Those regulations were buttressed by a pact with Japan and the Netherlands, which dominate the market for semiconductor manufacturing equipment, with the growing distrust between U.S. and Chinese officials driving an intense technology competition.
A worker checks the display panel showing a computer chip and the Chinese words for "Independence" at the booth for Chinese supercomputer manufacturer Sugon during the World AI Conference in Shanghai, Wednesday, July 5, 2023. China's government appealed to Japan on Monday, July 24, not to disrupt the semiconductor industry after curbs on exports of Japanese chip-making technology took effect, adding to technology restrictions Washington and its allies have imposed on China on security grounds.
Ng Han Guan/AP
“The United States, out of its motive to maintain unipolar hegemony, is unwilling to see the development and revitalization of China and other emerging countries,” Wang Yi, the Chinese Communist Party’s top diplomat, said Friday in Singapore. “It tears away the pretense of fair competition and coerces other countries into unilateral protectionism against China.”
Yet skepticism regarding China’s posture has spread throughout the region, with officials often citing Beijing’s behavior to explain their security-minded posture. The Chinese diplomatic chief aired his complaint as New Zealand, a member of the Five Eyes intelligence-sharing bloc with the U.S. but long viewed as the ally most enthusiastic to partner with China, published an intelligence report putting a spotlight on Chinese strategy and espionage.
“PRC has significant and growing intelligence and security capabilities, and its efforts are increasing New Zealand’s exposure to the consequences of strategic competition,” the New Zealand Security Intelligence Service declared in a new report.
The spy agency put a particular spotlight on foreign interference campaigns launched by China, Russia, and Iran.
“Most notable is the continued targeting of New Zealand’s diverse ethnic Chinese communities,” the NZSIS said. “We see these activities carried out by groups and individuals linked to the intelligence arm of the People’s Republic of China.”
That report is just the latest setback for Chinese officials seeking to allay the anxieties of American allies, whom they hope to dissuade from joining any multinational effort to “decouple” their economies from China. Yet Biden’s team and other democratic leaders place an increasing emphasis on the need to “de-risk” their relationship with Beijing, following a coronavirus pandemic that exposed the vulnerability of supply chains concentrated in China and Chinese General Secretary Xi Jinping’s ominous posture toward Taiwan and his attempt to claim control over vast swathes of the South China Sea and its vital international shipping lanes.
“We are for de-risking and diversifying,” Secretary of State Antony Blinken told reporters during his June trip to Beijing. “That means investing in our own capacities and in secure, resilient supply chains; pushing for level playing fields for our workers and our companies; defending against harmful trade practice; and protecting our critical technologies so that they aren’t used against us.”
Biden continued in that vein this week with the publication of a new restriction on U.S. investment in China’s technology sector — particularly the industries on the cutting edge of artificial intelligence, quantum computing, and other high-end technology developments.
“The program complements the United States’ existing export control and inbound screening tools with a 'small yard, high fence' approach to address the national security threat posed by countries of concern advancing such sensitive technologies,” the White House said in a Wednesday bulletin. “Specifically, it will prohibit certain investments in entities that engage in specific activities related to these technology areas that pose the most acute national security risks, and require notification for other sensitive investments.”
Such a circumscribed rule left congressional China hawks wanting more. "President Biden's long-awaited executive order is a small step in the right direction, but the loopholes are wide enough to sail the PLA navy fleet through, and it doesn't address the passive flows of U.S. money into malign CCP-affiliated companies,” Rep. Mike Gallagher (R-WI), who chairs the House Select Committee on the Chinese Communist Party, said Thursday. “Congress needs to step up now and ensure we stop funding the CCP's military buildup, techno-totalitarian surveillance state, and human rights abuses, including the ongoing genocide in Xinjiang.”
Still, Chinese officials condemned the rule as “blatant economic coercion and tech bullying” by the Biden team. “China will follow the developments closely and resolutely safeguard our rights and interests,” the Chinese Foreign Ministry said.
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