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Since Donald Trump’s Administration, the U.S. has been looking to develop its own technology and become less dependent on China for the supply of strategic products. Recently, this bid was strengthened with the executive order signed by President Joe Biden to work with American allies to build supply chains for chips and technology products without China’s participation.
The United States “imports about 80 % of its rare earths from China and depends on the country for up to 90% of some medical products.” That is why the new measures will focus on supply chains for semiconductors, electric vehicle batteries, rare earth metals and medical products, as reported by Nikkei Asia.
America ceded ground to China in the development of its own 5G wireless network, which is why former President Trump insisted on developing 6G technology as a way to respond to the loss of leadership in the field. These new measures are in line with regaining the lead.
The U.S. plans to share information with “allied countries on supply networks for important products and will seek to leverage complementary production.”
One of the requests the United States has made to its partners since 2020 is to do less business with China. This led some Apple and Samsung suppliers to move their factories from China to Vietnam.
Washington has also called on economies that are technology or strategic resource powers, such as Taiwan, Japan, and Australia, to join a transparent network of technological developments in the face of the threat posed by China’s growth in the field.
In late 2020, this call led to delegates from the Trump Administration and their peers from the Taiwan government agreeing to “promote technology cooperation in seven areas, including fifth-generation semiconductors and wireless, as well as secure and reliable supply chains.”
The agreement allowed Taiwan Semiconductor Manufacturing Co. (TSMC), Taiwan’s largest and the world’s most robust chip company in this area, to begin construction of its Arizona facility, which is expected to generate more than 1,600 jobs and is expected to cost more than US$12 billion. It is scheduled to start operations in 2024.
The United States is partnering with Australia in rare earths to work around China’s dominance. Lynas, the Oceanic country’s largest miner, “is building a processing plant in Texas with financial support from the U.S. Department of Defense.”
It should be recalled that rare earths are special minerals such as neodymium, dysprosium and holmium that are used to create devices in the nuclear industry, high-strength magnets, and in the manufacture of robots, vehicles, hard disks and wind turbines.
South Korea, for its part, is a pioneer in artificial intelligence advances, a field in which it cooperates with the U.S. and Europe in the exchange of information and the creation of the regulatory framework. In addition, giants such as Samsung and LG are working with the United States to supply batteries for electric vehicles.
Japan, hand in hand with America, plans to transform core industries using artificial intelligence and other technologies, “invest in digital governance and build new next-generation enterprises.”
China dismisses American bid
China dismissed U.S. plans to change supply chains as unrealistic, according to Chinese Foreign Ministry spokesman Zhao Lijian. Zhao told the media that such measures “will not help solve domestic problems” and will only harm global trade.
The Asian giant appeals to international trade laws and free markets despite having the upper hand in all fields by implementing policies of slavery, fraud and intellectual property theft.
Fraud and intellectual property theft in Chinese technology
China is preparing chip companies to dominate the market by 2030. However, the ambitious bid has led to a “series of reckless investments in poorly planned projects,” which has allowed Chinese companies to commit fraud.
Those companies, in collaboration with the Chinese Communist Party, have been denounced for stealing intellectual material as well as designs from companies such as Samsung, according to South Korean authorities.
The Trump Administration denounced China as “the greatest law enforcement threat to the United States” and the FBI claimed that in 2019, China stole American technology by “any means necessary” at an estimated cost to the U.S. economy “of between $300 billion and $600 billion” annually.
The decisions taken by the Trump Administration bet on the development of technology opening the way to leadership for the United States, after having missed the opportunity seized by China with 5G technology and with the production of advanced technologies.
American leadership in the sector will also allow developments to be backed by the security and confidence provided by transparent agreements with powerful American allies in the supply of high-tech components.
Camilo Bello is a consultant focused on Asia Pacific studies and has experience in strategic management. He has studied law in Colombia and is currently pursuing studies in language and history at National Taiwan Normal University. He has collaborated with Students for Freedom in Hong Kong and Taiwan // Camilo es consultor enfocado en estudios de Asia Pacífico y experiencia en gestión estratégica. Cuenta con estudios en Derecho en Colombia y actualmente se encuentra realizando estudios en lenguaje e historia en National Taiwan Normal University. Colaborador de Estudiantes por la Libertad en Hong Kong y Taiwán