How many times have Biden administration officials suggested, implicitly or otherwise, that the goal of US export restrictions and investment curbs isn’t to impede China’s economic advancement? And how disingenuous is that contention?
A lot and very. Biden officials (and Biden himself, for that matter) have suggested as much on any number of occasions, and it’s very disingenuous.
Plainly, curtailing the free flow of technology impedes economic development. It was, after all, the free flow of technology which set the stage for 120 years of rapid global growth. The US is absolutely trying to impede China’s economic development, ostensibly on national security grounds, and guess what? It’s working. With a little help from Mao-style economic mismanagement.
According to some observers, Xi’s myriad missteps (he’d say they aren’t missteps at all, but he’s a delusional tyrant, so what are you gonna do?) have severely undermined China’s odds of overtaking the US economically.
Back in September, Bloomberg Economics said that although China may surpass America by “a small margin in the mid-2040s,” it’ll likely fall behind again after that. Before the pandemic, analysts generally assumed China would overtake the US for good within a decade.
As the figure above shows, if China experiences any sort of serious financial event (i.e., a crisis), Xi’s economy won’t even come close to eclipsing the US, let alone for any extended period of time.
With the above in mind, it’s worth noting that the Biden administration effectively strong-armed Europe’s most valuable tech company last year, according to new reporting, which said ASML nixed some sales to China at The White House’s urging prior to the phasing in of relevant export bans.
According to the linked Bloomberg article, ASML was permitted to send China three high-end deep ultraviolet lithography machines before January. Biden (actually Jake Sullivan) called up the Netherlands and asked for those shipments to be canceled, at which point the Netherlands suggested he talk to ASML directly.
(“ASML, how can I direct your call?” “Sales please.” “Are you calling about an existing order?” “Yes.” “Do you have that order number?” “Well, it’s somebody else’s order.” “I’m sorry?” “Look, can you just connect me with your supervisor?” “I can try. Can I get your name sir?” “Joe. Joe Biden.”)
Ultimately, the Dutch government revoked the licenses in question, or at least “partially.” “A license for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 has recently been partially revoked by the Dutch government, impacting a small number of customers in China,” ASML said, in a statement.
Wang Wenbin, one of the colorful cast of regulars at the Chinese foreign ministry, said Tuesday that the Netherlands needs “to be impartial” and should “respect market principles and the law.” You know, like China always does.
The US pressure campaign started under Trump, who insisted the Netherlands ban exports to China of the ultraviolet lithography machines, which only ASML makes. After Trump was exiled to Mar-a-Lago following a failed coup, Biden “asked” (those are scare quotes) the Dutch to expand the restrictions to another ASML product line.
The expanded ban was due to take effect on Monday, but at America’s urging, and amid Chinese stockpiling, the Netherlands effectively pulled it forward into 2023.
As the figure above shows, China accounted for nearly half of ASML’s sales in Q3. That figure in Q1 of 2023 was — drumroll — just 8%.
On New Year’s Day, Xi and Biden traded letters to commemorate the establishment of diplomatic ties in 1979.
“Over the past 45 years, China-US relations have weathered storms and moved forward,” Xi told Biden, who, in turn, told Xi that he “look[s] forward to building on the progress made by our predecessors.”
War seems inevitable.
Possibly even more important to the future decline of China as an economic powerhouse than this news is the fact that the child-bearing aged women of China are completely fed up with Xi. Borrowing from Seinfeld, “No children for you!”
See the WSJ article in today’s paper, “China is Pressing Women to Have More Babies. Many Are Saying No.”
They are in the age bracket of children born during the “one-child” policy era. Boys were preferred, with “lucky” girls who were not wanted getting sent to orphanages. Some were adopted overseas, such as the adopted daughters of some of my friends. They grew up well enough, but the orphanage system seemed to be a bit of a trauma for those who were adopted at older ages (up to the age of 12). Somehow, I not surprised they may have developed a negative view of parenthood, especially if there are no (known) grandparents for support.
War is inevitable….with Netherlands ?? (just kidding)
Historically, these guys were the boss of Europe for many years. Read about the Thirty Years War against Spain. The Dutch were strong. They laid the groundwork for the modern global economy.
The guy who was supposedly going to be soft on China is harder on them than his predecessor just less boisterous. He has done more to improve the US economy vis a vis China than any trade warrior ever did. And why shouldn’t he be obviously misleading, that’s Xi’s SOP.
How much longer will the US be able to strong arm other nations to impose restrictions on technology sales to China? South Korea and, to a lesser extent, Japan were dragged in kicking & screaming when the first round was rolled out. The Netherland was the toughest lift, so I’m a little surprised that they caved again.
Some countries don’t share our view of immanent peril and look to support the interest of their major exporters. They are following the recommendations that Trump offered in his inaugural address to the UN: “Wise leaders always put the good of their own people and their own country first.”
Another round may prove more difficult.
Meanwhile … the Taiwan elections loom on January 13th. Recent polling suggests that the pro-independence DPP is leading, but still garnering less than 40% support. Thanks to the first past the post system, they will probably win a plurality.
But the question then may be, how much support will military action to support Taiwan garner in the US Congress when a majority of voters supported the two parties who favor better relations with the PRC?
How many of the “voters who favor better relations with PRC”… would agree to be taken over by PRC. Better relations are great in principle…. but that’s not an option being offered by PRC. Xi has made it really clear that he insists on reunification period.
How do you know what the PRC has offered BEFORE the DPP took power? Or what might be offered to a less strident administration?
For the pragmatists, the HK outcome may not be as off-putting as bitter emigres would like you to believe. I’m surprised by how many friends with the ability to leave (via a spouse with citizenship in Canada or Australia for example) have stayed put.
The biggest risk, imho, is that China’s imploding economy and demographics speed up; resulting in the demise of Xi/communism/authoritarian controlled economy- at which point, China fully embraces capitalism.
At that point, the US will really have something to worry about. I think this could be in less than 10 years.
In our ageist society, it is common to underestimate Biden because he is, looks, and sounds old. He’s the most experienced person ever to take the Presidency, and by legislative accomplishments with the thinnest margin in Congress, maybe the most effective. At heart a pragmatic centrist, Biden knows how to dissemble and prevaricate every bit as well as Xi.