Dire Consequences of China Chip War

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Most Americans go about their daily lives never giving thought to a tiny piece of technology that is part of practically everything they do. They also probably haven’t given any consideration to what would happen if these marvels of 21st Century life were to become unavailable or get so expensive that their modern world would melt down.

Computer chips are everywhere: cellphones, cars, toasters, airplanes, air conditioners, elevators, and they run almost everything that we do. What people also may not know is that 90% of the world’s chips are made in Taiwan, a small island nation that is in the crosshairs of Communist China, one of the world’s most populous and voracious countries. While policy makers embroiled the U.S. in trillion-dollar global wars–Iraq, Afghanistan, and currently Ukraine–the People’s Republic of China has been quietly and steadily making moves to take the place of America as the globe’s superpower, and a key element of their strategy is controlling the world’s computer technology.

That China wants to rule the world is no secret. Their “One Belt, One Road” strategy specifies in detail how the communist nation plans to spread its influence all over the world. They are building up their military, particularly in the South China Sea where war games and threats to American naval and air superiority are already underway. They have had their eyes on Taiwan for some time and, according to military analysts, are just waiting to make their move. The administration of President Biden is well aware of China’s saber rattling and recently dispatched Secretary of State Anthony Blinken to Beijing where he was disrespected by President Xi Jinping. Arriving in the Chinese Capital as a Biden envoy, Blinken was left waiting hours before he could sit with the communist leader and was only given 30 minutes. He left with pretty much nothing to say except that the United States does not support Taiwan's right to sovereignty, a capitulation that did little to instill confidence in the leaders of a country that controls the world’s silicon fate.

Treasury Secretary Janet Yellen fared no better when she went to China a week later, leaving shortly after being rebuffed by Jinping who instead visited a Chinese military base to discuss the country’s readiness for war. Her reception was less than stellar having to dine at a local restaurant rather than a state banquet usually reserved for foreign dignitaries. Wrapping up her trip, Yellen reported that “decoupling”’ from China, regardless of its militaristic goals, would not be in the best interest of the United States. “No one visit will solve our challenges overnight. But I expect that this trip will help build a resilient and productive channel of communication,” Yellen said at a news conference in Beijing. “Broadly speaking, I believe that my bilateral meetings served as a step forward in our effort to put the US-China relationship on surer footing,” she said of her meeting with Chinese economic officials.

Biden critics are quick to note that the President’s weakness in standing up to China can be traced back to a trip he took to the communist nation with his son, Hunter, on Air Force 2 when he was vice president. Upon their return, Hunter’s company received a $1.5 billion investment from the Chinese leaders, a “bribe” that political opponents say has been paying dividends ever since. The Bidens are under investigation by various House committees looking into millions in payments from foreign countries distributed to various family members through a network of banks and transfers. The congressional investigators are also looking into companies set up by the Bidens with various Chinese businessmen.

Raising the stakes in the global war for technological supremacy, China last week said it will restrict the export to the U.S. of gallium and germanium–key elements in making semiconductors, LED screens, solar panels, and other vital electronic equipment. The move was viewed as retaliation for U.S. curbs on semiconductor technology sales to China imposed earlier this year after China sent a spy balloon over the United States, stopping at various military installations before Biden had it shot down after it exited the East Coast. The restrictions also heightened concerns that China would limit the export of other materials, particularly rare earth metals, used in any number of technologies, of which the country is the world’s largest producer. The communists warned that the gallium and germanium curbs were "just a start," and that countries should brace for other impacts if the U.S. and its allies continue to pressure the country.

In announcing the restrictions, Chinese Commerce Ministry spokesperson Li Jing stated, "In light of recent trade disputes and national security considerations, China has decided to impose limitations on rare earth metal exports to the United States. These measures are necessary to protect our national interests."

Military analysts are also concerned over Biden’s weak response to China setting up a forward base in Cuba in a scene reminiscent of the Cuban Missile Crisis when Russia started installing warheads on the communist isle just 90 miles off the U.S coast. Then-President John F. Kennedy threatened to invade the country unless the installations were removed. The Biden administration had made no such response and neither Blinken or Yellin reportedly brought up the issue during their China excursions. Strategists also question Biden’s sudden withdrawal from Afghanistan leaving behind billions in U.S. armaments and the Bagram airbase, one of the largest in the world, to Chinese control.

U.S. corporations have long railed against China’s unfair trade practices which require companies doing business with the People’s Republic to turn over trade secrets, particularly in the area of advanced technology. China has used these technologies in their military buildup and have even availed themselves of U.S. capital in developing its capabilities. The relationship between American dollars, billions of which are from U.S. worker pension and retirement plans, and China’s planned rise to power was thrust into the open recently when the investment firm Sequoia Capital announced it was splitting itself into three separate regional firms, a dramatic move many see as a signal that ties to China are a growing liability in Silicon Valley. The company is a huge contributor to both Democrat and Republican officials in Washington and is responsible for billions in U.S. investments in China.

In his first bid for the White House, Donald Trump made the enormous trade deficit with China a key issue and frequently challenged the country’s economic and military moves. The focus on China as a competitor to the United States has been downplayed by the Biden administration which adheres to a policy of cooperation. That may all change if Xi Jinping pulls the trigger on his plan to take control of Taiwan and the world’s computer chip production, a move that could make World War 3 not one of munitions and troops, but one of Artificial Intelligence, computing power and economic might.