Technical Nationalism: What Are the Risks of the Biden Administration Adopting a Hostile Strategy Against Chinese Technology?
Published on December 15, 2022, “Politico” featured an article by Jon Bateman, a senior fellow in the Technology and International Affairs Program at the Carnegie Endowment for International Peace. The article, titled “Washington’s Anti-China Stance Will Backfire,” delves into the contours of Washington’s hostile strategy against Chinese technology over the last decade, and the risks associated with the Biden administration adopting an aggressive approach towards Chinese technology. The article points out that hardline figures in the Biden administration, Congress, and the State Department are leading a “tough” technological decoupling strategy towards China.
Hostile Movements
According to the article, the strategic foundations of the once-strong economic relationship between Beijing and Washington have eroded over the past decade. Under President Xi Jinping, China has become more assertive abroad and more repressive at home. The article identifies several indicators that suggest Washington has adopted a hostile strategy against Chinese technology over the last decade:
The Obama Administration’s Adoption of “Technical Nationalism” Against China: According to the article, as Chinese companies’ capabilities and influence grew, enabling them to manufacture almost everything, old American concerns about unfair trade resurfaced. Even the Obama administration, which initially sought a “positive, constructive, and comprehensive relationship with China,” eventually announced a “return to great power competition” and began to embrace a strategy of “technological decoupling and technical nationalism.” The article explains that “technical nationalism” means that technology should be directed and harnessed by the state rather than global market forces. The rise of foreign cyber threats, particularly Chinese intellectual property theft and Russian election interference, made Washington view America’s digital openness as a source of vulnerability. The article also notes that China’s enormous success in emerging strategic sectors like 5G and artificial intelligence led American policymakers to conclude that bilateral technological relations were no longer working in Washington’s favor.
The Trump Administration’s Decisive Implementation of Technical Nationalism Against Beijing: The article points out that the Trump administration decisively applied American technical nationalism against China, evidenced by the significant intensification of export controls targeting China, particularly through the Commerce Department’s Entity List, which prevents foreign companies from importing American products. The number of Chinese companies on this list quadrupled between 2018 and 2022, with Huawei being one of the most prominent targets. According to the article, besides export controls, a range of other American measures aimed to curb the flow of technology to and from China. The Trump administration tightened scrutiny on Chinese investments, imposed widespread tariffs on Chinese goods, and restricted the use of Chinese equipment by federal agencies and contractors. The article also highlights that Chinese students and researchers faced greater difficulty obtaining visas, with some subjected to criminal investigations and prosecutions to reduce ties with Beijing.
Biden’s Early Efforts to Correct Trump’s Mistakes Towards Beijing: According to the article, the Trump administration succeeded in addressing some high-impact threats proportionately, but in other cases, there were restrictions that threatened to cause more harm than good. For example, Trump’s ban on the WeChat app threatened to disrupt American business communications in China. The article emphasizes that after taking office, President Joe Biden sought to correct all of Trump’s mistakes, noting that while Trump relied on restrictive measures to counter Chinese technological threats, Biden worked with Congress to secure massive investments in the U.S. technology ecosystem. The article explains that defensive tools like export controls are not strong enough to keep China at bay indefinitely, but they can buy time for the United States to make long-term improvements in its technological leadership and resilience. According to the article, Biden closed some significant loopholes and sought, for example, to regulate Trump’s chaotic operations by conducting serious investigations into Chinese technology companies instead of imposing a blanket ban, and by publishing more detailed standards on when such a ban should be imposed.
Biden’s Adoption of a New, More Hostile Strategy Towards China: Despite Biden’s early corrective efforts, the article suggests that there were growing signs of a more aggressive agenda within the Biden administration. Reports in May indicated that a tougher U.S. sanctions list might target a major Chinese technology company for the first time. Then, in October, there was a surprise announcement of new export controls on semiconductors and chip-making equipment. The article believes that this latest move represents the most severe escalation of decoupling so far, especially since the new U.S. export controls prevent China from importing advanced foreign semiconductors needed to train AI algorithms. At the same time, Washington sought to prevent China from making domestic versions of these chips or even mid-range chips that power the Internet of Things and other smaller devices.
Counterproductive Outcomes
The article highlights that Biden’s actions delivered the strongest blow yet to China’s technological ambitions, indicating that more severe measures are on the way. However, the article stresses that Washington cannot move forward without assessing the ongoing deep escalation and the increasing risks to U.S. interests. Among the most prominent of these risks are:
Exposing U.S. Companies to Massive Losses Due to Export Restrictions: The article notes that the U.S. economy has much to lose. U.S. semiconductor manufacturers have anticipated billions of dollars in lost revenue due to the latest round of export controls, which reduces the funds available for research and development to maintain global competitiveness and improve computing power worldwide. The article mentions that as technology advances, the category of highly controlled chips and equipment will become a larger slice of the market than ever before, gradually widening the revenue gap for U.S. companies. According to the article, although Washington is flooding the semiconductor sector with support, analysts have warned that such amounts will not achieve the goals that many expect, and Congress will not be lenient in supporting every American industry facing future export controls.
Damaging Washington’s Relationship With Its Economic and Technological Allies: The article emphasizes that the United States risks alienating allies and partners it needs to achieve larger economic and technological ambitions, especially since the new export controls extend extraterritorially, restricting the sales and operations of Taiwanese, South Korean, Japanese, and Dutch companies in China. However, these controls were imposed unilaterally, the article notes. The article highlights that after Washington failed to secure the support of these governments, it proceeded without them. According to the article, this has led to grumbling among allies who are also angered by the new discriminatory U.S. subsidies for electric vehicles, semiconductor manufacturing, and other sectors. While Washington hopes to align these subsidies with its allies, the article suggests that it risks triggering an uncoordinated and wasteful subsidy race, if not an outright trade war.
Increasing the Level of Deterioration in U.S.-China Relations: The article argues that Washington’s adoption of a “semi-containment” strategy for China will lead to a further decline in U.S.-China relations, making cooperation more difficult and increasing the likelihood of a crisis. The article also warns that harsher U.S. economic sanctions could exacerbate the dangerous effects of the rivalry between the two sides.
Obstructing Most Commercial and Scientific Innovations Across China: According to the article, U.S. officials have pointed out that advanced processors could help Beijing enhance its nuclear and missile capabilities, indicating that they should be banned for this reason. The article suggests that these military applications represent only a small part of the countless important uses of powerful semiconductors and AI. According to the article, benign uses of semiconductors and AI include automating business processes, e-commerce, cybersecurity, and disease diagnosis. The article also notes that they are used in climate change research, which will benefit the United States and the world. The article argues that if the new controls succeed, they will hinder a wide range of commercial and scientific innovations across China and reduce its GDP by up to 0.6%.
Conclusion
The article concludes by stating that the United States undoubtedly faces real threats from China, and the Biden administration confronts real dilemmas in addressing them. It emphasizes that there are no risk-free options for managing interdependence with a strategic competitor. The article calls for realistic assessments and logical decisions based on the best available information. It also stresses the need for political space to question the current path of the Biden administration and conduct a more precise cost-benefit analysis. Finally, the article urges greater attention to Washington’s allies and partners, who share its concerns about China but prefer more moderate responses.
