According to Reuters, the US Department of Commerce has decided to impose restrictions on exports to China’s biggest chipmaker SMIC after concluding there is an “unacceptable risk” that equipment supplied to it could be used for military purposes.
Though SMIC flatly denied previous allegations, Washington’s attitude to snuff out China’s biggest chipmaker appears to have taken shape. It is clear that the other shoe is about to drop.
This is the new battleground of the US after its all-out siege against Huawei to paralyze China’s high-tech industry. The entire information industry is built on the foundation of the semiconductor industry. And the US is firmly in control of it. It therefore has controlled the commanding heights of the technological war against China. There is no doubt that the US will abuse this advantage further.
Modern enterprises are all growing up in this new age of globalization. They are all linked in the global supply chain. The US can command key Western companies, and thus exert a considerable degree of control over supply chains. It can cut off key supplies to Chinese high-tech companies at any time. This is a fundamental threat to China.
It now appears that China will need to control all research and production chains of the semiconductor industry, and rid itself of being dependent on the US. However, this will take some time to achieve.
In fact, even if we make up for some of the weaknesses, the disadvantage won’t be entirely removed since we have been following behind the US. Moreover, most Western countries are US allies. Even if China and the US are evenly matched at present, most countries and companies will more than likely follow the US with the restructuring of supply chains.
China’s massive markets represent huge benefits to both the US and the West. Therefore, a complete decoupling of the two markets is unlikely to happen. China can buy itself time by using market leverage to loosen the US blockade. However, we need to be aware of the fact that the market alone cannot determine the whole structure of the global supply chain.
From Huawei to SMIC, the Chinese people should see for themselves that we are facing a protracted battle against high-tech suppression being led by the US. This is almost the key process for the great rejuvenation of the Chinese nation.
In order for China to win US’ respect to rules in dealing with the China-US relations, we must become global leader in important areas and form cross-constraints with the US. Market leverage alone (such as not buying American agricultural products,) are far from enough.
As a matter of fact, companies including Huawei, Bytedance, Tencent all have made some breakthroughs. They have even made important innovations in application technology. But they are all extensions based on the US semiconductor technology. The foundation of the entire industry is still in Americans’ hands. For now at least. China must leap from zero to one to provide solid support for the country’s competition with the US.
We need to prepare for a “new long march.” We are destined to undergo difficulties in the years to come. But we don’t have to be panic. The US is unable to crush us. The technological war it launched against China has been proven to only have had limited comprehensive effects. It has been over two years and a half since the US fired its first shot at ZTE. But the reality shows us that whatever it does, the US cannot put the brakes on China’s development.
We must not underestimate the difficulties we will face in this contest. We shouldn’t have illusions that a single breakthrough or two will fundamentally change the situation. China needs comprehensive and fundamental encouragement for innovation. We should launch a nationwide mobilization effort. From the perspective of society, innovation shouldn’t be a “tiring” thing. But it is supposed to be “exciting” and “highly rewarding.” As long as the government offers necessary policy guidance, companies will have the full motivation to innovate. This will yield fruitful results.
China must smash US attempts to strangle China’s technological development. China’s economic and technological research and development capabilities already have a solid foundation. If China cannot step over the decisive threshold of technological innovation, it will be a humiliation to the wisdom, will and endurance of the Chinese people. It will also be an erosion of Chinese society’s political confidence. We have no other choice but to fully unleash the creativity of the Chinese people.