U.S. Efforts to Contain Xi’s Push for Tech Supremacy Are Faltering

Since Donald Trump hit Xi Jinping’s government with punitive tariffs in 2018, his push to cut the trade deficit has snowballed into a full-scale bipartisan effort to stop China from becoming the world’s biggest economy and obtaining technology that threatens American military superiority.

At a glance, the campaign appears successful. China’s economy is no longer on pace to overtake the US and is actually falling further behind. Its tech giants face difficulty obtaining advanced chips to develop artificial intelligence. And US allies are complying with requests to deny China access to the best chip-making equipment, including one-of-a-kind machines from Netherlands-based ASML Holding NV.

But despite more than six years of US tariffs, export controls and financial sanctions, Xi is making steady progress in positioning China to dominate industries of the future. New research by Bloomberg Economics and Bloomberg Intelligence shows that Made in China 2025 — an industrial policy blueprint unveiled a decade ago to make the nation a leader in emerging technologies — has largely been a success. Of 13 key technologies tracked by Bloomberg researchers, China has achieved a global leadership position in five of them and is catching up fast in seven others.

That means the world outside the US is increasingly driving Chinese electric vehicles, scrolling the web on Chinese smartphones and powering their homes with Chinese solar panels. For Washington, the risk is that policies aimed at containing China end up isolating the US — and hurting its businesses and consumers.

...

The US export controls announced on Oct. 7, 2022 “made it much more difficult for scaled domestic Chinese production of strategically important chips like the most advanced AI accelerators,” said Jordan Schneider, founder of the ChinaTalk newsletter and adjunct fellow at the Center for a New American Security. Even so, he added, “uneven execution on the stated intentions of the export controls, particularly on the semiconductor equipment manufacturing side, have made the past two years post Oct 7th far easier for Chinese semiconductor firms than they could have been.”

Read the full article and more on Bloomberg.