China escalates tech war with US using powerful resources

In the ongoing tech war between the United States and China, the US has been taking a more aggressive stance as of late. Last year, President Joe Biden's administration implemented strict restrictions on Chinese AI firms' access to American technology. The US has also been pressuring its allies to follow suit. The Netherlands, under pressure from the White House, recently announced that it would limit the sale of chipmaking equipment to China. ASML, a Dutch company that produces advanced lithography machines, will now only sell low-yield devices for etching cutting-edge chips to Chinese customers. Additionally, there are reports that the US government may soon restrict Chinese access to American cloud-computing services.

In response to these actions, China has imposed export controls on gallium and germanium, two metals used in high-end semiconductors. These controls will go into effect on August 1st. China supplies about 80% of the world's gallium and germanium, and the US sources as much as 50% of its germanium supply from China. If an all-out ban is implemented, it could have significant repercussions for the global chip industry. The production of various products, including chips, screens, fiber-optic gear, and solar panels, could be disrupted. Furthermore, it could hinder the development of next-generation technologies and impact industries such as electric vehicles, nuclear energy, and weapons.

This move by China comes at a crucial moment in Sino-American relations, as both sides have been discussing the possibility of stabilizing their relationship. Recent high-level meetings between officials from both countries have taken place, including a meeting between the US treasury secretary and China's commerce secretary, as well as a visit to China by the US secretary of state. However, China's export controls on chip metals indicate that it is not willing to back down and is capable of retaliating.

Some may argue that China's restrictions may not have a significant impact, as the Chinese government could grant export licenses quite freely. A total ban would also hurt Chinese exporters who rely on selling gallium and germanium to American customers. Nonetheless, this tit-for-tat escalation suggests that the tech war between the US and China is becoming increasingly balanced and evenly matched.


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