“So I guess we’re in a new cold war. Leaders of both parties have become China hawks. There are rumblings of war over Taiwan. Xi Jinping vows to dominate the century.
I can’t help wondering: What will this cold war look like? Will this one transform American society the way the last one did?
The first thing I notice about this cold war is that the arms race and the economics race are fused. A chief focus of the conflict so far has been microchips, the little gizmos that not only make your car and phone work, but also guide missiles and are necessary to train artificial intelligence systems. Whoever dominates chip manufacturing dominates the market as well as the battlefield.
Second, the geopolitics are different. As Chris Miller notes in his book “Chip War,” the microchip sector is dominated by a few highly successful businesses. More than 90 percent of the most advanced chips are made by one company in Taiwan. One Dutch company makes all the lithography machines that are required to build cutting-edge chips. Two Santa Clara, Calif., companies monopolize the design of graphic processing units, critical for running A.I. applications in data centers.
These choke points represent an intolerable situation for China. If the West can block off China’s access to cutting-edge technology, then it can block off China. So China’s intention is to approach chip self-sufficiency. America’s intention is to become more chip self-sufficient than it is now and to create a global chip alliance that excludes China.
American foreign policy has been rapidly rearranged along these lines. Over the last two administrations, the United States has moved aggressively to block China from getting the software technology and equipment it needs to build the most advanced chips. The Biden administration is cutting off not just Chinese military companies, but all Chinese companies. This seems like a common-sense safeguard, but put another way, it’s kind of dramatic: Official U.S. policy is to make a nation of almost a billion and a half people poorer.” . . . .