Speaking to Fox Business on Friday morning, Wilbur Ross confirmed the US will blacklist China’s Semiconductor Manufacturing International, the latest blow to a company already staggered by multiple jabs from the Trump administration.
The decision to give SMIC the Huawei treatment comes just weeks after the administration added CNOOC, SMIC, China Construction Technology, and China International Engineering Consulting Corp to a list of firms controlled by the PLA, and just three months after Ross first began to tighten the screws on the firm, which is key to Beijing’s semiconductor ambitions.
This is just insult to injury to cap off a week that found the company grappling with a management crisis. The shares fell nearly 10%, the worst weekly slide since early September, when rumors that Trump was targeting the company first began to circulate.
The White House will apparently add dozens of additional companies to the trade blacklist which “now includes more than 275 China-based firms and affiliates,” Reuters noted, adding the usual color around the implications for SMIC: “The designation would force [the company] to seek a special license from the Commerce Department before a US supplier could send it key goods, part of a bid by the administration to curb its access to sophisticated chipmaking technology.”
Ross, in his Friday remarks, said he’d be “surprised” if Joe Biden changed the list. The Chinese Foreign Ministry called the move “another example of how the US is using its national power to crack down on Chinese companies.”
By now, the market is desensitized to these kinds of broadsides. “Cold War 2.0” is passé.
Speaking of charades investors and traders are desensitized to, Brexit talks continued Friday, with more headline hockey suggesting a deal wasn’t assured. “We’ll keep talking. There’s a gap that needs to be bridged,” Boris Johnson said. “We hope our EU friends will see sense [but] if that doesn’t happen, come January 1 we will trade on WTO terms,” he added. “Yes it may be difficult at first but this country will prosper mightily under any terms and any arrangement.”
Famous last words? Who knows. As Trump loves to put it: “We’ll see what happens.”
“To me, it seems like Johnson was preparing the ground to be able to say the EU had moved, and then we have a deal [but] Barnier didn’t make it sound like a breakthrough was imminent,” AxiCorp’s Stephen Innes remarked. “So, expect the Brexit headline Yo-Yo string to get a good workout today as the rest of the FX market are left anchored to that string as well.”
“The UK government believes that time is on their side, so even as the European Parliament stated that this Sunday will be the last possible moment for a deal if negotiators want it to be ratified before year-end, please keep in mind what happened to all the other deadlines,” Rabobank wrote Friday. “Let’s just hope they’ll get it done this time around.”
In Washington, the brinksmanship continued, as both parties essentially promised a new stimulus deal was imminent, while simultaneously suggesting a brief government shutdown was possible.
Stimulus needed to be attached to a broader spending package, and lawmakers were still hammering out the details. Friday marked the “official” deadline, but it was possible that Congress would need to work over the weekend. Now that would be a tragedy.
Stating the obvious, John Cornyn called a prospective shutdown “unnecessary self-inflicted damage.”
Needless to say, a government shutdown, even if it only lasts for a few hours and has no real impact, would further undermine public confidence in Congress. The latest read on Gallup’s Congressional job approval poll (from November) found just 23% approve of lawmakers’ performance. That was actually an improvement from 19%.
Congress’s approval rating hit the highest since 2009 earlier this year, when the initial virus relief package was approved. Unfortunately, “highest” is an extremely relative term in this context.
“I know people are working to get this wrapped up as soon as they reasonably can, but adding another element of chaos doesn’t seem prudent,” Cornyn went on to muse.
Generally speaking, “adding another element of chaos” is never the most “prudent” course of action.
So let’s get this straight. Russia just hacked most major Federal government agencies including the NIS as well as around 300k major corporations globally, and we’re sanctioning China? Can it be any more clearer that Trump is in bed with Russia than this? I feel like I’m taking crazy pills listening to people try to defend a man who has been all Russia all the time for 5 years try to explain that he is in fact, not a Russian agent.
Russia hacks his government and he doesn’t bat an eyelash. He distracts by sanctioning China instead. This is not to say that China isn’t worth sanctioning, it’s to point out the timing of these sanctions. Why now? Why in the middle of possibly the largest hack of American government in the history of IT Operations do we decide to target China with sanctions and remain mum on Russia? This from a man to tried to get Russia added back to the G7, said he trusted Putin over his own intelligence officers, and has so many of his people in jail (now pardoned) for Russian ties including feeding polling data to Russian Oligarchs. The title of the Trump presidential documentary should literally be “From Russia with love”.
The “solution” to the Russia problem is to hit their sovereign debt with draconian sanctions, threaten their energy exports, or otherwise cut them off from USDs. Those options are varying degrees of implausible for a laundry list of reasons, but it’s not as if we don’t know how to put a stop to this kind of thing. It’s almost like the western world kind of accepts Russian intelligence as an international bad actor, like this is a James Bond film that “needs” a stereotypical Russian bad guy. It’s ridiculous. They showed their military is still formidable in Syria, but chasing around Sunni extremists with warplanes is like shooting fish in a barrel, and they never had to commit any sizable ground presence because Qassem Soleimani brought in Quds officers to direct Hezbollah, which in turn bolstered whatever was left of Assad’s army by ~2015. Russia’s “win” in Syria thus wasn’t really all that impressive. The point is: I’m not sure why the west (and this includes Germany, France, and the UK of course) tolerates any kind of bad behavior out of Moscow. There’s an energy security rationale, I suppose, but Russia needs to sell it just like people need to buy it. So, I don’t know — it seems to me that at some point, Treasury should just say “Look, the next time this happens, we’re going to do you like Trump did Iran.”
I almost feel like the west underestimated the formidability of Russia’s information warfare capability. It was as if they understood that they could impact social media through bot warfare and hack a political committee but they weren’t capable of a wide ranging hack like we are seeing now. If the energy play is the only reason to keep looking the other way at the various infractions they commit, maybe I underestimate how in love we are with oil at this point in the green energy push globally. It doesn’t seem worth it keep letting the red headed step child step toes out of line left and right. As far as Treasury sanctions go, we had them, Mnuchin removed them. Now they didn’t target sovereign debt specifically, but they did target the Oligarchs who are largely responsible for the deviant behavior Russia exhibits. Again, Treasury REMOVING sanctions under Trump just puts an exclamation point on how far this administration has gone to enable Russia. And if you want to look at how we enabled Russia militarily, well look no further than all of the troop withdrawls Trump has made and is trying to make in his last days. Sure, on the surface it can be viewed as “we don’t want to be committed to countries that don’t support us”. But it can also be viewed as removing the largest deterrent to Russian invasion. Time will tell if that’s the end goal of these moves but I wouldn’t be surprised at all to see Russia become much more active in the middle east and Africa after Trump is gone. Which brings us back to, again, why has Trump worked tirelessly to the benefit of a single country (not his own) for the entirety of his presidency up to and including the last days? Why is he blocking a military spending bill that has anti-money laundering provisions in it? Provisions that would make it impossible for Russia to hide it’s monetary contributions to US funding operations? https://www.buzzfeednews.com/article/willfitzgibbon/fincen-files-money-laundering-laws-us-world
I mean, everyone knows the answer. But reiterating it at this point just alienates people who may be otherwise rational and open to debate on other critical issues about the future of the global economy, the wealth gap, etc. etc. Anybody who, by now, doesn’t accept the obvious when it comes to Trump is never going to accept it, no matter how much evidence they have. For most of those folks, it’s not a matter of evidence, it’s the psychological distress of looking themselves in the mirror and admitting to a level of personal gullibility that raises highly uncomfortable questions about what else they may have been duped into doing over the course of their lives. It’s easier to just persist in the Trumpian fantasy than confront reality. It’s like paying $15,000 for a fake Rolex. If you come to suspect it’s fake, it’s probably easier to just keep wearing it and pretend it’s real than take it to a jeweler only to have your worst fears realized.
You know, there’s a reason I read your blog most days and it goes way beyond economics. You perceive human behavior beyond the depth of most observers and I can’t agree with your sentiments more. I’ll back off the commentary that incites emotional responses, I see your point.
The silver lining of Trump actively pursuing return to power in 2024 may be that it will be harder to sweep away and under his own, his family, and his co conspirators treasonous Russian transgressions and connections over these past several years.
Let’s not forget that Mitt Romney had an opportunity to override the reversal of treasury sanctions on one of the oligarchs and punted, suggestion more widespread engagement / corruption.
And most saddest of all is the senate and down ballot results from November, and lack of interest, understanding, and or priority to these national security and democracy survival matters .
Meanwhile we still have 30+ days until 1/20/21 to go.
Thanks to you both for your efforts on this thread.
What’s truly sad is that there’s no one higher up to charge him with treason.