We must prepare for the reality of the Chip Wars
The question of how far decoupling will go depends on China’s next move as well as the extent of new US rules
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THERE has been widespread portrayal of President Joe Biden’s recent semiconductor export bans on China as America’s declaration of economic war with the country. But, in fact, Washington is merely reacting to Beijing, and it is a late reaction at that.
It is worth recalling that China actually paved the way for formal supply chain decoupling with the Made in China 2025 programme. This was announced seven years ago (before the Trump presidency) and explicitly spelt out the country’s desire to be free of Western technology — chips in particular — within the next few years.
The Communist party quickly retired the Made in China phrase after some backlash from the West, but the policies largely continued. More recently, a new emphasis from Beijing on the Military-Civil Fusion strategy added fuel to the fire, with economic and military development goals, particularly around technology, becoming more closely aligned.
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