Washington attacks China’s tech industry

Letters from O'Brien #23

In recent weeks, several extreme decisions were made by those in Washington, namely the United States trade relationship with China. By far the most extreme and puzzling decision was made in an attempt to ‘cripple’ China’s tech industry while inadvertently dooming the United States… After hearing of this decision, I thought it necessary to share some opinions on the possible outcomes of these decisions.

For context, the it was decided that US citizens involved in China’s semiconductor research and manufacturing sector should step down, a move aimed squarely against the Chinese Communist Party. An ultimatum was given; employees must either step down from their positions, or sacrifice their US citizenship. The specifics around this decision are unclear, but it appears to have come out of the blue, shocking both Beijing and those in the semiconductor industry. According to reports, all US citizens working in China’s semiconductor industry resigned on October 19, which has had a dramatic impact on China’s entire semiconductor manufacturing capability. Since the decision is relatively fresh, the ripples are yet to be felt.

Additionally, a number of restrictions have been put on trade regarding China’s tech industry. As of midnight October 18, US vendors can no longer trade with Chinese companies without specific licensing. This means restrictions on all servicing and support, alongside the actual trading of products.

POWER STRUGGLE

As tiring as it is to highlight the leadership issues in the west, it is important to do so, as it explains much of what is happening here. Firstly, the US position on China is surprising, especially given the willingness of the current US administration to essentially go along with a Neo-Marxist Utopian plan for global control, which initially flowed out of China. Standing up against a collectivist socialist regime is a good thing, but given the current state of US politics, it is uncertain whether or not the US is itself becoming a collectivist state. If this were to be the case - which it very well might be - then the ‘fight against China’ is not so clearly a battle between liberty and repressive collectivism (as any sane person would hope it would be), but rather a battle between competing Utopian socialist camps, as was the case in World War II, where the National Socialists fought viciously against Bolshevism (both ideologies had more in common than in difference, but saw each other as heretical corrupters of the perfect idea: socialism).

As with England's fall from global dominance at the turn of the 20th century, the United States attempts at destroying its adversaries are fruitless since they do not address the root cause of power instabilities: that the enemy is already within. As a result, no matter its attempts, the US cannot hold onto global power unless it shifts its ideological trajectory away from socialist collectivism.

The US sanctions on China are not only provocative, they will also inevitably damage the US itself. The semiconductor industry will continue to falter and supply chains will be weakened even further as vendors are no longer able to properly trade without specific licenses. Given the short notice, this will lead to even further price hikes on cost-of-living in the US itself. In this way, those in Washington have become the very thing they claim to be fighting against: a collectivist government sacrificing the wellbeing of its own people for the sake of grand power games.

In terms of international relations, the provocation of a major power such as China is not something to be done lightly. It seems like a less justified repetition of the oil embargoes placed on the Empire of Japan in the 1930s, but unlike the case of Japan, the Chinese are not currently engaged in expansionist ground wars and genocide across Asia. Instead, China’s own internal issues remain internal and unchanged, in fact it is unlikely that forcing the CCP into a corner - if that is actually happening - will yield worse results on the domestic front as the Party attempts to retain power by force.

Even from Washington’s perspective, this decision does not appear to make any sense in the long term. Does the US actually win? Unlikely. In fact, the Chinese semiconductor industry appears to be impacted only at the cutting edge, and only for a brief period of time, as the majority of Chinese military hardware is either imported from Russia, or manufactured using in-house Chinese tech. It is also worth noting that in response to this, China will inevitably allocate more funds to nationalising semiconductor research and manufacturing, putting any US-backed ventures out of business, and strengthening its resolve in regards to controlling Taiwan’s tech sector.

There is a likelihood that this decision has also doomed the US semiconductor industry itself. By essentially blacklisting Chinese consumers, a calculated loss of 40% of revenue means that cutting edge semiconductor design and fabrication is practically impossible. Even TSMC - which leads the world in semiconductor manufacturing - operates on a shoestring, as its production cycles require constant overhauls to keep up with the ever smaller die size required for chip improvements. These overhauls cost billions, and must be done at least every few years to keep up with the production cycles. It is known that if TSMC loses customers - despite leading the world - it faces serious problems in its ability to both keep up with production expectations, and overhaul its production capabilities. Now imagine being a fraction of the size of TSMC, while blacklisting over a quarter of the potential market.

HOW IT SHOULD HAVE GONE

While it is easy to merely criticise this decision, it is also not hard to see what could have happened to prevent what will inevitably be increased geopolitical hostility and rising living costs…

As with so many modern western political issues, the situation with China stems primarily from the United States wilful rejection of nationalism in favour of a strange sort of Neo-Fascist globalism. Outsourcing to China was never going to end well for two reasons. Firstly, competing superpowers are never at ease with one another, and history has proven this continually. Secondly, the common conservative argument that the free market ‘selected’ China (justifying continued reliance) fails to account for the fact that the Chinese Communist Party operates a controlled market within Chinese borders, and also - by their own ideology - stands against the principles of the free market. As a result, I do not believe that the ‘invisible hand’ of the free market will work as expected when attempting to trade with a centralised collectivist society.

Speculators jumped on the opportunity to outsource production of goods to a developing nation. Speculators, unsurprisingly, have speculated only so far as short term profits allowed. In this way, the US labour-workforce has become a fraction of its former self, with the market instead shifting towards abstractions such as software development and data-oriented industries. The long term implication of this was evident; either the 1990s globalist dream of interconnection, love, and peace lasts indefinitely and outsourced labour is no problem, or globalism fails and the world returns to isolated nation-states, in which case the United States must essentially start from scratch. The latter is now apparent.

If the United States had continued to invest into its own national industries, watch its borders, make calculated moves regarding reliance on foreign nations, and stop continually falling into the trap of globalist Marxist ideology (which the US has done continually for almost sixty years), then perhaps the situation being felt now would not have occurred. The US economy would be stronger, the average citizen would likely have seen continued prosperity, economic growth, and technological innovation based around discovery and greatness, not reductionism and data collection. The foolish and anti-American move to export excessive amounts of labour will not be without consequence, and the strangely hostile actions taken to ‘reboot’ these industries (or at least destroy them in China) do not appear to be a viable solution.

OTHER MOTIVES

Despite my criticism of the Chinese government, I am increasingly critical of the United States own policy regarding a ‘war with China’. Why? Because the United States is not defending a free market democracy, nor is it fighting for liberty. It is defending its own position on the global stage against what it sees as a major competitor. Now this would be reasonable if the US were still a country built upon individual rights and freedoms. But since those ideas are being flushed down the drain as quickly as possible, the differences between a CCP controlled state and a Washington controlled state are vanishing rapidly. There are two historical similarities to what we are witnessing… Firstly, collectivist socialist ideologies often violently clash with one another, hence why the bulk of the fighting in World War II was between the Soviet Union and the National Socialists, despite both claiming that their primary enemy was democracy and the ‘evils’ of free market capitalism. The same was even observable on the micro scale during the war, with US and British forces suspending weapons supplies to the French Resistance, following the revelation that the weapons sent were rarely being used against the Nazi occupying force, but were instead being put to use in drive-by shootings and street fighting between competing French communist and socialist groups.

The second historical parallel is between the United States and the Britain. Since the US is essentially the modern equivalent of the British Empire in its reach, military power, and global influence in both politics and economics, it is fair to say that the comparison is not entirely out of place. As the British Empire began to lose its place as global leader, those in power turned to increasingly irrational methods of quelling dissent, retaining overseas power, and stopping any rising empires from taking over as world leader. The increasingly erratic and panicked decisions of Britain essentially set the stage for the First World War, and similar decisions would later lead to soured relationships with the Japanese Empire, and provoke Germany into another conflict. I am not saying that Britain was responsible for either war, but they certainly didn’t help quell the possibility of conflict. What is important to note is that World War II essentially marked the end of the British Empire as world leader (at least in a symbolic sense), as it sporadically attempted to defend its title from Nazis, who’s economic recovery and expansion gave the impressions that Germany was on the way to become the preeminent global superpower, whilst trying to hold together a dying overseas empire (particularly in the British Raj). In the end, despite its best efforts, Britain would fall from power, giving way to the United States. In this same way, the United States is threatened with the same fate. China’s economic growth projections put them on the path to overtake the US (who’s economy will grow, but at a stalled rate) over the next few decades. Likewise, Americas most fatal choice - to accept socialist ideas and reject free market capitalism - is resulting in an overseas ‘dying empire’ similar to that witnessed by Britain one hundred years ago.

This is the broader picture; that the United States is acting irrational as it attempts to retain power. Add to that the ideological rot that is modern Marxism being accepted by those in power, and it should come as no surprise that the current situation is unfolding in the manner it is. Nothing here appears to be defending or bettering the average American. Attempting to ‘starve out’ China by stalling shipping, placing restrictions on imports and exports, and forcing employees out of jobs are all essentially moves made by one warring collectivist socialist nation to another. Even the terms ‘democracy’ and ‘liberty’ have been perverted in their use, lacking their original meaning as politicians throw them around to justify their socialist ideologies superiority and claim to power over China’s socialist ideology. It is absurd.

Final Thoughts

It was obvious that globalism would fail, but in their sudden realisation, Washington may have just made the situation even worse than originally thought possible. Just as Russian sanctions are thrusting Europe into what could be a pre-WWIII level crisis, poorly planned decisions appear to be paving the way for more issues in regards to China, with no care for the average US citizen who will feel the impact of this the most. Just as with the initial exporting of industries to foreign nations, US politicians with their goal of destroying the free market, and speculators with their lack of ideological discernment have worked against both the United States, and the betterment of her people.

If the United States wants to keep its head above water - let alone continue leading the world - its citizens must re-institute the founding doctrine of the nation. Those at the wheel in Washington are by definition not Americans, since they fail to uphold what is put forward in the Declaration of Independence. America is not yet lost, but action must be taken to bring it back in to the light. Things seem to be on the knife edge given the mid-term election. Let’s hope the USA can come back to her senses and her foundational principles.