This week, the Biden administration stepped up its crackdown on Chinese technology in what is becoming the global conflict of the century. In this latest phase, an executive order signed Wednesday blocks and regulates U.S. investments in Chinese technology, covering everything from advanced computer chips and micro-electronics to quantum IT and AI. This is where national security begins to trump macroeconomics. It’s a stark choice between economics and world technological dominance, and only the latter can be a winning choice in the longer term.
The aim of the executive order is to undermine China’s ability to take advantage of U.S. investment dollars in its booming high-tech sector–advancements that are then used to boost its military. The hope is that the move to help keep China’s aim of world technological domination in check will not harm the U.S. economy. But it won’t be that simple, even if it is a geopolitical necessity. There is no way for a free-market democracy to go to war on this level with an authoritarian one-party behemoth that maintains vast control over its key industries and its general population without interfering in big business to some extent. There will be major supply chain disruptions and a massive shakeup of financing for huge projects. It is a necessary sacrifice.
In terms of energy, China’s dominance in certain sectors is hindering U.S. ambitions to shift to clean energy. While America’s oil and gas technology dominates, with the shale…
This week, the Biden administration stepped up its crackdown on Chinese technology in what is becoming the global conflict of the century. In this latest phase, an executive order signed Wednesday blocks and regulates U.S. investments in Chinese technology, covering everything from advanced computer chips and micro-electronics to quantum IT and AI. This is where national security begins to trump macroeconomics. It’s a stark choice between economics and world technological dominance, and only the latter can be a winning choice in the longer term.
The aim of the executive order is to undermine China’s ability to take advantage of U.S. investment dollars in its booming high-tech sector–advancements that are then used to boost its military. The hope is that the move to help keep China’s aim of world technological domination in check will not harm the U.S. economy. But it won’t be that simple, even if it is a geopolitical necessity. There is no way for a free-market democracy to go to war on this level with an authoritarian one-party behemoth that maintains vast control over its key industries and its general population without interfering in big business to some extent. There will be major supply chain disruptions and a massive shakeup of financing for huge projects. It is a necessary sacrifice.
In terms of energy, China’s dominance in certain sectors is hindering U.S. ambitions to shift to clean energy. While America’s oil and gas technology dominates, with the shale boom rendering the U.S. and fossil fuels superpower, China dominates in battery tech and solar panels. In other words, the U.S. is dominating the past, while China is dominating the future. This situation is also causing numerous problems for American companies that have Chinese ties and investment dollars, and for investors who are becoming increasingly worried about losing out due to the scrutiny of Chinese involvement in various projects. It’s now become a liability to have won Chinese investment, while not so long ago, the opposite was true.
Plenty feel this fear of Chinese investment in U.S. technology is an overblown panic. That, however, is very shortsighted. Short-sightedness and greed have long dominated the Western investment climate, which Beijing has been quick to capitalize on. And it’s not about the money; it’s about power.
But this global conflict (it is nothing less) will also spur more American development in the race to shift to clean energy. There’s nothing like a war-like competition to spur homegrown solutions, which in the longer term will be economically and geopolitically advantageous to North America.
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China’s lasting power and influence rest in its economy. Why endanger any of it — and put the world and itself on edge — by pursuing the troublesome dream of unification with Taiwan? So little to be gained and so much to lose.
