Backfire by Agathe Demarais

Author:Agathe Demarais
Language: eng
Format: epub
Tags: POL023000, POL011000, POLITICAL SCIENCE / Political Economy
Publisher: Columbia University Press
Published: 2022-11-15T00:00:00+00:00

Given America’s dominance over the microchip sector, Washington knows that measures curbing China’s access to U.S. semiconductor technology have every chance to deal a blow to Beijing’s technological ambitions. In 2018 Congress started to put this strategy into practice, quietly adopting a flurry of regulations meant to cut China’s access to American know-how.50 The hostilities began when lawmakers ordered the Commerce Department to start controlling the export of “emerging and foundational” technology.51 This represented the first step toward the resurrection of Cold War–era export controls. However, instead of targeting defense exports—as was mostly the case with the former Soviet Union—these restrictions applied to the U.S. civilian, high-tech sector. China was not mentioned in Congress’s legislation, but it was the only country that lawmakers had in mind.

The measure had more bark than bite. For one, Congress failed to define what an “emerging or foundational technology” is, leaving it to the White House to do some thinking around this issue.52 Semiconductors were obvious contenders, but the legislation remained open to interpretation. There was another problem, too. Measures to monitor U.S. exports could only be applied, in the words of lawmakers, to technologies that are “essential to the national security of the United States.” Again, defining what this meant was easier said than done and certainly open to a myriad of debates. However, the Congress-mandated controls on “emerging or foundational” technologies were only a start.

A few weeks later, Congress struck again, tightening the legislative framework to scrutinize foreign investments in the United States.53 Lawmakers chose to broaden the definition of what constitutes national security.54 They also included minority investments in the scope of the foreign takeovers that the White House can control or even block.55 Again, there was no mention of China in the deliberations of Congress. However, Chinese investments in U.S. tech companies in Silicon Valley were the obvious—if not sole—target of these updated regulations.

Capitol Hill assumed that depriving China of the possibility of buying American technology start-ups would slow down Beijing’s ability to innovate. To be fair, Chinese investments in the United States were already in free fall because of trade tensions—they stood at a mere US$5 billion in 2018, down from almost six times more in 2017.56 As a result, the legislation probably had only a limited impact.57 However, American lawmakers knew that they were sending Beijing a clear message: “we are watching what you’re doing and intend to take steps to stop you in your tracks.”

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