BARRY EICHENGREEN
Starting in October 2022, the late, lamented (by some) administration of President Joe Biden implemented restrictions on US exports of advanced semiconductors to China. A classic “dual use” technology, these chips power generative AI and supercomputers used in weapons systems, cyberattacks, and surveillance. Equally, they can enhance the ability of companies to compete internationally – in this case the ability of China’s high-tech firms to compete with their American rivals.
In its final months, the Biden administration doubled down on these restrictions, adding high-bandwidth memory chips and chipmaking tools to the list of prohibited items. Donald Trump’s administration, dominated by China hawks, is poised to ramp up these measures still further.
China has retaliated with export controls on rare earths and related materials used by American producers. But the more serious threat is that China will accelerate the development of its own capacity to design chips and build chipmaking equipment. If China closes the technology gap faster than it otherwise would have, then US export controls will have proven ineffectual or even counterproductive.
It’s hard to predict the success or failure of China’s efforts. But it may be informative to look to the past, where some of the most relevant history comes from, of all places, France in the 1960s.
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