By: Aroona Khan
Contrary to prevailing views that economic interdependence promotes peace and cooperation among the states, experts argue that economic interdependence has security implications due to asymmetric economic relations among states. A state may be dependent on other states for critical goods and commodities. States fear that the other side may leverage such dependence to devastate its economy. States are trying to reduce such exposure which is leading to more tensions and military competition. The United States and China are the most significant trade partners. However, this trade is asymmetric. It implies that trade balance between the two supports the former. The latter fears that in future, China may exploit such dependence on critical goods and materials.
Furthermore, the U.S. is also persuading its allies to de-risk their economies to reduce their vulnerabilities and diversifying their trade relationship. It is also convincing them to use the U.S. sponsored supply chain coalitions. That is why the United States’ administration has been trying to decrease China’s capability to purchase advanced US materials such as semiconductors, chip-making materials, and the other essential technologies since the year 2022. Now just few weeks before Donald Trump’s return as president, the United States announced new export restrictions on China’s advanced semiconductors on December 2, 2024. China has condemned the United States’ hawkish stance. As the U.S. is increasing its efforts to reduce the export of the state-of-the-art chips to China. These chips are used in artificial intelligence and advanced weapon systems.
The U.S. commerce secretary said that Joe Biden’s presidency had been tough in strategically addressing the issue of China’s military upgrading through export controls. The national security adviser Jake Sullivan also said that the United States has taken important measures to protect the use of our technology by our adversaries which is important for the national security. The United States has banned the deals to 140 companies; these include Chinese chip firms Piotech and SiCarrier. The U.S. Commerce Department said that these restrictions are introduced to reduce China’s development of advanced artificial intelligence that is used for advanced warfare and weaken China’s growth of its semiconductor ecosystem.
These rules included the ban on China-bound deliveries of high bandwidth memory (HBM) chips. These chips are used in applications such as Artificial intelligence training, software utensils and chipmaking materials. These also included the equipment made in Singapore and Malaysia. The firms that are mostly affected are Chinese or Chinese-owned industries in Singapore, Japan, and South Korea. After the latest restrictions of United States on exports of advanced chips to China, the government of the Netherlands said it is also concerned about the United States’ tension and is closely monitoring the latest restrictions and would soon decide if it will increase its own controls on China. The Netherlands-based computer chip equipment maker ASML said that if their government would enforce the new rules, these latest restrictions would affect its export of deep ultraviolet lithography (DUV) systems to the chip making plants in China. As they are already following the restrictions of the US government on the selling of extreme ultraviolet lithography machines (EUV) to China.
Following these restrictions, China, announced that it had forbidden exports of the important minerals such as germanium, gallium, and antimony to the United States. These are rare minerals, which are mined in small quantities. These minerals are used in the materials used for the military such as in different kind of weapons systems and technical products such as semiconductors and chips that are used in advanced computers and artificial intelligence. These elements are also used in electrical machinery such as vehicles and other devices.
China announced it the next day after the United States’ latest restriction on its chip sector. These trade problems between the United States and China had increased just before newly elected President Donald Trump joined next month. According to the Chinese officials, this was an important initiative as the United States was violating export controls. The Chinese industry associations have said that these restrictions and sanctions would affect the global chip industry and will increase the prices in the United States.
These trends reflect that political and military tensions are increasing between the two states. Expectations are that the incoming Trump administration will intensify these trends next month. These developments may have negative repercussions on global economic interdependence and promote competitive environments among states. These trends will also affect the companies globally that are producing or depend on the semiconductors as these bans on exports would eventually cause the prices to increase.
The writer is associated with the Institute of Strategic Studies Islamabad. She can be reached at [email protected]
