Declaring War on China

David Goldman opined recently that we are sleepwalking our way into a war with China. Hmmm. 

According to Niall Ferguson, we might already have crossed that Rubicon. While no one was paying much attention, we have declared war on China. Considering that nearly all politicians today and nearly all commentators, from the left and the right, are itching for a war with the Middle Kingdom, the story has largely been ignored.

The first volley was the Biden administration’s support and encouragement for the Ukrainian nation in its war against Russia. The point of that exercise, according to Ferguson, was to show China what we can do with sanctions and with a reserve currency.

Biden’s plan for Russia might be described cynically as fighting to the last Ukrainian, but to what end? Ostensibly the US is determined to “support Ukraine in its fight for its freedom,” but the real goal is “to degrade Russia’s ability to wage future wars of aggression.” That is why the administration has made almost no effort to broker a cease-fire, much less peace. The White House seems to want this war to keep going, though I suspect that will change after the mid-term elections.

And here’s the key point. Sanctions on Russia, Sullivan declared, have “demonstrated that technology export controls can be more than just a preventative tool … they can be a new strategic asset in the U.S. and allied toolkit.” In other words, the US-led economic war against Russia is like a demo for China’s benefit: 

This is what we can do to you, too.

Of course, things are not going swimmingly for the Ukrainians. Reporting tells us that a goodly part of the civilian infrastructure is being destroyed.

And besides, the purpose of the war is to effect a major strategic realignment, with Russia and China offering alternative reserve currencies, the better to undermine dollar hegemony.

In short, stay tuned.

But then, while all of this was distracting us and while China was running a grand show meeting, the Biden administration took steps to destroy China’s semiconductor industry. That is, whereas the Trump administration had imposed some sanctions against Chinese industry, the Biden team has upped the ante considerably,

 This is far from easy to understand, so I will pass the baton to Ferguson:

The remarkable thing is that the US has not waited for China to invade Taiwan to go ahead and do it. New restrictions just imposed by the US limit the transfer of advanced graphics processor units to China. (These are chips used in AI applications in data centers.) Washington has also limited the use of US chips and expertise in Chinese supercomputers, and China’s imports of chipmaking technology.

The aim is to impair Beijing’s ability to deploy artificial intelligence by driving up the cost of computing in China, whether for companies or the government. In short, the Biden administration aims to halt technological progress in China — rather in the way Trisolarans try to stunt Earth’s technological progress in Liu Cixin’s science-fiction novel The Three-Body Problem.

The restrictions are a declaration of war against Chinese tech industry:

As Edward Luce noted in the Financial Times, “The new restrictions are not confined to the export of high-end US semiconductor chips. They extend to any advanced chips made with US equipment. This incorporates almost every non-Chinese high-end exporter, whether based in Taiwan, South Korea or the Netherlands. The ban also extends to ‘US persons,’ which includes green card holders as well as US citizens.”

The most extraordinary thing about these measures is how little comment they have elicited in the media. Trump did nothing so radical.  As Luce put it: “A superpower declared war on a great power and nobody noticed.”

Well, we are strong and powerful, and why not impose these conditions during a grand and grandiose meeting of the Chinese Communist Party.

Ferguson suggests that this might be considered an act of war. And that it might precipitate a conflict. He draws an historical analogy;

Cutting China off from high-end chips today seems a lot like cutting Japan off from oil in 1941. And it is an especially hazardous move when more than 90% of the production of those chips takes place in Taiwan, an island that China claims as its own.

Now, as of today’s news Taiwan Semiconductor is cutting down its business with China. For the moment we do not know how China will react, and whether it will react subtly or overtly, as in Pearl Harbor. Clearly, the Biden administration believes that the lesson of Ukraine, directly toward China as much as anyone else, will act as a deterrent and will keep China out of Taiwan.

And yet, we are confident that China is not going to take this lying down. We do not know, and Ferguson does not tell us whether China will find ways to work around the sanctions regime. And yet, the Biden administration has cast the die. 

While no one is paying much attention, we are being led into a conflict, one that might not be quite easy to control as is the war in Ukraine. After all, Putin is not winning in Ukraine, in any conventional sense, but he is reducing that nation to rubble. In the meantime the European will to use sanctions to fight the Russian bear seems to be wavering. Our sanctions policy is being tested on the European ground, where its people are readying themselves for a long cold winter.

As of now, we await developments from China; we await its next move. Surely, a war against Taiwan is far more likely today than it was before the Biden administration decided to destroy the Chinese semiconductor industry.

To keep this all in some perspective, examine some of the facts on international trade between America and China. The two nations are interdependent at what many would call a frightening level.

For that we turn to Brent Sadler of the Center for National Defense:

But the ongoing problems at our ports and shop shelves drive home an even more disturbing truth: American prosperity and well-being have grown far too dependent on China and the whims of the Chinese Communist Party (CCP).

Not only does China supply a tremendous amount of our consumer and commercial goods, medical supplies, pharmaceuticals, and vital raw materials, but it also controls a huge share of the world’s shipping fleet and commercial shipbuilding capabilities. Beijing’s domestic policies, therefore, exert tremendous influence on both the global shipping industry and the production and distribution of Chinese exports. This creates a double vulnerability for the United States.

It might be worthwhile keeping in mind that the Chinese Zero-Covid policies shuts down some supply chains and shipping. 

Sadler offers some relevant information,. 

While zero-COVID is employed as a rationale for shutting down supply chains, the CCP has shown itself willing to use its industrial might for political purposes, too. The Australians are enduring a steel embargo for bucking Beijing’s South China Sea territorial claims. Filipinos are being punished with a banana embargo for pushing back on China’s encroachment on its Scarborough Shoal. South Korean tourism has taken a hit from Chinese travel prohibitions imposed because Seoul is hosting U.S. missile defenses. And the Lithuanians are dealing with a complete Chinese embargo because they opened a diplomatic representative office using the title “Taiwan” instead of “Taipei.”

The war in Ukraine has heightened supply chain concerns over raw materials like phosphates for fertilizer and neon gas, which is critical in microchip manufacturing. In the wider competition over access to such resources, China has the ships and the economic wherewithal to assure its needs are met. U.S. consumers do not.

It would certainly be interesting to think that we are involved in a grand international chess game with China. It would be far more frightening to think that we are playing Russian Roulette.