Much of U.S. foreign policy in the 21st century has been defined by a desire to maintain its position as a global superpower in the face of a budding China. In the last 20 years, China has increasingly defined itself as not only a regional superpower, but a global one. By consistently beating the U.S. in production and manufacturing, China’s economy is proving itself to be a sore subject for American political leaders on both sides of the aisle.
Driven by a desire to reaffirm American economic status, the Biden administration and congressional leaders have advocated strongly for policies that would make investment more attractive to American manufacturers who had previously exported jobs and resources to China.
The CHIPS and Science Act of 2022 is one of the centerpieces of this platform. The bill, signed into law by President Biden in August, allocates nearly 300 billion dollars in new funding aimed at encouraging domestic research and manufacturing of semiconductors.
The bill was preceded by the global chip shortage wherein the demand for semiconductor chips exceeded the supply available. Following the COVID-19 pandemic in 2020, supply chains were dramatically, and in some cases irrevocably damaged. This made access to integral semiconductor chips difficult.
Semiconductor chips are hidden deep in the machinery they power and are made from a series of layers of pure element compounds, like silicon. Unseen by most users, these small chips hold the key to modern technology.
Without a semiconductor chip, modern innovations like cars, refrigerators, microwaves, televisions, and mobile phones would be impossible. It is no wonder why both the U.S. and China are jockeying for control of this critical component of everyday life: whoever controls the production of these chips wields an outsize influence in the global markets.
Although only controlling roughly 7% of the global semiconductor market share in 2021, China’s influence is growing exponentially. As one of, if not the leading innovator in the 21st century, experts insist that “in some areas, China has eclipsed, or is on the verge of eclipsing, the United States” technologically.
By encouraging domestic investment and cutting off China’s access and ability to produce the necessary semiconductor chips, the U.S. is hoping to observe ripple effects in Chinese tech markets.
Another market American leaders are hoping to disrupt and tilt in their favor is artificial intelligence (AI).
According to Stanford University, China and the U.S. are the world’s two leading countries in AI “vibrancy.” China, with one-third of the global academic papers on AI, is within striking distance of the U.S. who currently leads with the funding of 299 new AI companies in 2021 compared to the 119 in China.
Policymakers in the U.S. are not naive to this competition either: “we must win the AI competition that is intensifying strategic competition with China” said businessman Eric Schmidt and Bob Work, a former Deputy Secretary of Defense during both the Obama and Trump administrations.
Aside from the benefits AI technology can provide to the global markets, an advanced AI infrastructure is a critical component of modern warfare. As the usage of autonomous drones in reconnaissance, mapping, and surveillance efforts continue to increase, so will the demand for the AI that directs them.
If the U.S. expects to maintain their preeminence in the global defense sector, the U.S. should invest in AI and the semiconductors that make them possible.
It is evident that the Chinese Communist Party (CCP) will continue to invest resources into semiconductor manufacturing and the products that follow. The real question is how will the U.S. respond?
The CHIPS Act is a meaningful step forward. By demonstrating the government’s commitment to a strong industrial sector, the U.S. is indicating that it will not back down against China’s technological encroachments such as the CCP’s continued theft of American technological and economic secrets.
It has been calculated that Chinese espionage has cost U.S. trade markets approximately $200 and $600 billion per year since 2000. By recruiting and placing spies in critical American business sectors, the CCP has made itself privy to the methods U.S. businesses used to rise to dominance and has co-opted these tactics for themselves.
A political problem requires a political solution. The nature of Sino-American affairs is undoubtedly fraught and the theft of American trade secrets is an economic crime that should not go unpunished.
Where the CCP undercuts American industry, the CHIPS Act will hopefully fill the gap. By reaffirming support for domestic production, the U.S. will prove that they are able to rise above the Chinese. If the U.S. sets the standard in semiconductor innovation, as the CHIPS act sets out to accomplish, it will force China out of a critical market and punish their economy in return.