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China becomes increasingly radicalised in response to reported SMIC ban

It looks like the US is imposing export restrictions on Chinese chip fab SMIC, which could be the last straw that tips China into a full-blown political response.

Reuters reports that suppliers of equipment to SMIC will now have to apply for special export licenses on pain of being put on the US naughty step. While there didn’t appear to be official confirmation of the move at time of writing, Reuters says it has seen the letter from the Commerce Department, which was presumably a controlled leak, so that’s a lot more solid than the usual ‘people familiar with the matter’.

The rationale for imposing sanctions of Chinese companies continues to evolve too. In this case the US thinks there’s an unacceptable risk that SMIC could pass on such high-tech gear to the Chinese military, which is now apparently reason enough to act against it. This seems like a very wide new front of the trade war, since any Chinese company could theoretically collaborate with the Chinese military.

“SMIC reiterates that it manufactures semiconductors and provides services solely for civilian and commercial end-users and end-uses,” said the company in a statement, stressing it has received no direct communication on the matter. “The company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses. The company will continue to pay close attention to this matter and issue further announcement as and when appropriate. Shareholders and prospective investors are advised to exercise caution when dealing in the securities of the company.”

That last bit seems like a forlorn hope since its shares were apparently down 7% on the news and it will presumably receive the leaked letter soon. It looks like the Chinese Communist Party has tired of exercising caution too, as there are increasing signs it is preparing both a counterattack and a full domestic mobilisation. The trade war is starting to take on the characteristics of a military one.

Earlier this month the CCP reportedly announced plans for much greater state control of the Chinese private sector, in the process confirming the suspicion that it could always do so whenever it wanted. Today the English-language homepage of the state-controlled Global Times features nothing but op-eds attacking the US actions against Chinese companies.

The most remarkable of them is a piece headlined China needs new long tech march after US attack on SMIC. While it provides further evidence of Xi Jinping’s desire to appropriate private property in the name of taking on the US, the specific language used is especially ominous.

The ‘long march’ refers to a protracted military manoeuvre undertaken by Communist forces during the Chinese civil war, which eventually allowed them to counterattack and prevail. It also cemented Mao’s position at the top of the CCP. The term has also been appropriated by communists in other countries to describe their strategy of subverting society in order to take it over.

The invocation by the Chinese state media of early Maoist narratives to characterise the Chinese response to the threat posed by US sanctions seems bellicose. External threats have always been one of the main reasons given by politicians for unilaterally increasing their power and Xi is not about to miss that trick. The apparent US strategy of pushing until it provoked a response has achieved its aim, but there’s no telling what more is to come from this cornered tiger.


11 comments

  1. Avatar Ijiji Anthony 28/09/2020 @ 3:06 pm

    China effort at thwarting US efforts to rescue the middle east from the grip of Iran war mongering & destabilization is a major offence.

    • Avatar Bryan 29/09/2020 @ 7:04 am

      It’s israel and us that’s doing the war mongering and destabilizion in middle east. Not China nor Russia. Get the facts right dude.

    • Avatar Vinnie 29/09/2020 @ 11:12 am

      US is trying to start war with Iran at any cost. This is pretty much the same, as US war in Iraq. Both had a long period of US propaganda, full of lies. Both countries presented zero threat to US. Both countries were for several years under arms embargo, to make sure they don’t have enough weapons when US invades. Both countries have oil, the major reason US wants to invade.

  2. Avatar ADRIAN BARNARD 28/09/2020 @ 4:35 pm

    AlONG WITH THE US BAN ON SUPPLYING HUAWEI WITH SEMICONDUCTORS THIS COULD BE THE STRAW THAT BREAKS THE CAMELS BACK.
    WHAT ODDS ARE THERE FOR A CCP STRIKE AT TAIWAN OSTENSIBLY IN RESPONSE TO “CONTINUED TAIWANESE AGGRESSION” BUT IN REALITY FOR TSMC?

    • Avatar Vinnie 29/09/2020 @ 11:19 am

      Yes, it may be the straw that brakes US back. US lies about Huawei, lies about SMIC, lies about China. The reason? US lost in technological competition. China simply can produce anything US can, at fraction of the cost. Now, when China learnt that it can’t buy from US and it can’t use US technologies anywhere, it will develop everything in-house. Intel processors at $800 a piece? We will see the Chinese equivalent at $20 a chip. Everybody wins, besides US.

      • Avatar Matthew 29/09/2020 @ 12:37 pm

        The US will lose, and the planet will lose. China will drive a race to the bottom, irrespective of the cost to climate and environment. Also, if it’s anything like steel production, the end product will be inferior due to lower quality assurance standards. But if they’re able to put everyone else out of business, then it won’t matter because there won’t be competition anyway.

        • Avatar The Waker 29/09/2020 @ 5:58 pm

          And who started this ? Again ?

      • Avatar happiman 30/09/2020 @ 6:30 am

        Did you say “Intel processors at $800 a piece? We will see the Chinese equivalent at $20 a chip”?
        Do you know why it is possible?

        https://thehill.com/opinion/international/464586-china-cheats-and-we-let-them

        Because Chinese company does not develop, more precisely , they cannot, but they steal and cheat.

        “Suddenly, China began producing and exporting a whole lot of products that looked just like stuff invented in the West. Here, we pay for software licenses, the lifeblood of today’s economy. In China, 99 percent of Microsoft licenses are counterfeit and unpaid for. “

  3. Avatar Bob 29/09/2020 @ 6:13 am

    It will be USA allies in South China sea that will feel the burden of CCP’s response, all western contries are to blame for our reliance on China’s factories giving them the technology. They can’t unlearn what they have been making for us under licence, this has reduced some sectors of manufacturing at home that would require billions of investment to get it where it needs to be. If this becomes military action or a complete breakdown of trade a few companies will take massive hits as they scramble to get their products manufactured elsewhere.

  4. Avatar Jason 29/09/2020 @ 4:09 pm

    Fkin idt Trump and US gov. Can’t believe we elected clowns and now turned warmongers wtf

  5. Avatar M.Saleh 30/09/2020 @ 2:06 pm

    China was radicalised before the SMIC ban and other bans started. The radical rogue state behaviour has to do with the Chinese economy nearing collapse due to massive bad debts accumulated by careless state lending.

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