How China Aims to Counter US ‘Containment’ Efforts in Tech

The US is engaged in what it terms “strategic competition” with China, a full-throttled campaign to prevent the world’s No. 2 economy from gaining an edge in state-of-the-art technology that could threaten both jobs and national security. On one track, President Joe Biden is using massive subsidies to support domestic industries seen as drivers of growth and innovation. Meanwhile, his administration is working to hobble China’s efforts with trade restrictions, blacklists and investment curbs. In response, Chinese President Xi Jinping is harking back to the country’s tradition of central planning, marshaling private companies and trillions of dollars in public money to drive research and development. For Xi, who has stressed national security more than any of his predecessors, becoming self-reliant in critical tech is imperative to counter what he sees as “containment” as tensions with the US escalate.

The Biden administration has pursued an industrial strategy aimed at building manufacturing capacity at home and diversifying supply chains in areas such as clean energy, electric vehicles, semiconductors and high-performance computing. At the same time, it’s been limiting not just advanced chips that can be exported to China but chip-making equipment and design software as well. The curbs were updated in October to close loopholes, while two promising AI chip design startups — Shanghai Biren Intelligent Technology Co. and Moore Threads Intelligent Technology Beijing Co. — were added to an “entity list” that essentially cuts them off from overseas chip suppliers. The US is also seeking to cut off funding: An executive order signed this year imposes limits on US investments in some Chinese semiconductor, quantum computing and artificial intelligence firms. The US has enlisted allied countries so that suppliers like ASML Holding NV in the Netherlands and Japan’s Nikon Corp. join its export controls. US National Security Adviser Jake Sullivan has said the US and its allies want to maintain “as large a lead as possible” to ensure that “technology that could tilt the military balance … is not used against us.”