MINERALS AND CHIPS
“Decoupling” and ‘Inflation Reduction Act” A Two-Faced American Aggression.
In the first of these articles I look at how America’s “Decoupling” from China threatens world peace and betrays a mindset focused on maintaining global dominance. In the second, I look at the so-called “Inflation Reduction Act” as another manifestation of this mindset, and how it will impact America’s “allies” in Europe.
In 2013 Christopher Clark wrote a great book called “The Sleepwalkers. How Europe Went to War in 1914.” The title reminded us of humanity’s current, somnambulant stumble towards global conflict.
In September 2022, US officials told chipmaker Nvidia that it would need special licences to sell Chinese customers two of its processors that are widely used to speed up AI calculations.
Nvidia said the crackdown was aimed at preventing military use of the processors. However, powerful AI chips are an important dual-use technology: they also plays a central role in the data centres that process large volumes of data, with broader economic effects.
Chinese foreign ministry official Wang Wenbin responded by saying that the US was attempting to impose a “technological blockade” in an attempt to maintain its “technological hegemony.”
The biggest users of the chipsets in China are cloud service providers and large internet companies. There are no direct local substitutes and the alternative, non-banned products from Nvidia cannot achieve the same speeds and are much more expensive.
Nvidia said the order also applies to GPUs sold in Russia, though it does not sell its products in the country. It added that about $400 million in potential sales to China in that quarter might be affected by the new licence requirement.
This was an early salvo in “America’s decoupling” campaign against China. On Friday 7 October 2022 America made it official. New export controls announced that semiconductors made with US technology for use in artificial intelligence, high-performance computing and supercomputers could only be sold to China with an export licence — which would be very difficult to obtain. Moreover, Washington is barring US citizens or entities from working with Chinese chip producers except with specific approval. The package also strictly limits exports to China of chip manufacturing tools and technology that Chinese companies could use to develop their own equipment.
“To put it mildly, [Chinese companies] are basically going back to the Stone Age,” said Szeho Ng, Managing Director at China Renaissance, one of the country’s leading investment banks.
The proxy war in Ukraine continues to dominate attention, for obvious reasons, but this move is seriously consequential for the world economy and world peace. The only part of the mainstream media that has focussed on the issues arising from decoupling is the Financial Times. In October 2022, Edward Luce wrote:
“Biden’s move draws on the premise that any advanced chip can be used by China’s military, including for nuclear weapon and hypersonic missile development. It is also meant to undercut China’s goal of dominating global artificial intelligence by 2030. But all such chips are dual use, which means that the US is now committed to blocking China in all kinds of civilian technologies that make up a modern economy…..
What we do know is that national security is once again the lens through which Washington sees the world. Rest in peace “the world is flat” and the “end of history”. The US has endorsed a zero-sum metric in which China’s rise is seen as being at America’s expense.”
At the end of January Adam Tooze wrote in the FT:
“If you take Washington seriously it is hard to avoid the conclusion that whatever the statistics tell us about the current state of affairs, the US is bent on revising the world economic system… If there is one thing that America’s divided polity can agree on, it is the necessity to confront China….we are on the cusp of a new historical epoch, a new cold war. And this is not the cold war of the detente era. In Washington these days even coexistence with CCP-led China is up for debate. Taken at face value this is a scenario of high-stakes confrontation that overshadows every other priority…..Rather than reconciliation and reconvergence, the Biden team holds out something far weirder. They do not want to stop China’s economic development, they insist, just to put a ceiling on every area of technology that might challenge American pre-eminence. How that is supposed to work is anyone’s guess…”
I quote Luce and Tooze at length because they are respected, serious writers, they’re not from the instinctively anti-American left, nor are they given to hysterical hyperbolae: if these guys are worried, we should all feel the same.
