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The Semiconductor Struggle – The New York Times

Publicly, the U.S. and China have turned down the heat recently on their relationship. Treasury Secretary Janet Yellen and Secretary of State Antony Blinken have both visited Beijing in recent weeks partly to improve communication between the two countries. “President Biden and I do not see the relationship between the U.S. and China through the frame of great-power conflict,” Yellen said at the end of her trip.

But the underlying reality is unchanged: The U.S. and China remain competitors for global supremacy. The two countries are great powers, and they are often in conflict.

Look at what’s happened since Yellen returned home on Sunday:

  • U.S. officials announced that in the run-up to Blinken’s trip last month, hackers apparently affiliated with the Chinese government broke into the email accounts of top U.S. officials, including Commerce Secretary Gina Raimondo, a noted critic of China’s policies. The spy balloon that flew over the U.S. early this year may have received more attention, but the hacking of high-level email accounts seems more belligerent.

  • Biden administration officials appear close to announcing rules restricting American firms from investing in many cutting-edge Chinese technology companies. Advocates say the rules are intended to keep Americans from financing threats to U.S. national security. Biden’s aides have held off on announcing the policy, partly to avoid disrupting the recent diplomatic outreach. (Here is a Times story with more details.)

  • The U.S. continues to enforce a strict set of restrictions intended to hamper China’s ability to produce advanced semiconductors. The Biden administration put the restrictions in place Oct. 7. “If you’d told me about these rules five years ago, I would’ve told you that’s an act of war — we’d have to be at war,” said C.J. Muse, a semiconductor expert at Evercore ISI, an investment advisory firm.

Muse’s quotation comes from a new Times Magazine article by Alex Palmer, and I recommend making time to read it this weekend. The article explains how the Biden administration is trying to prevent China from getting access to cutting-edge semiconductors, which are vital to many digital technologies. By doing so, the U.S. hopes to slow China’s efforts to build advanced weapons, develop artificial intelligence and surveil its own citizens and people in other countries.

The U.S. believes it can succeed, Alex writes, because the semiconductor industry is “a web of mutual interdependence, spread all over the planet in highly specialized regions and companies, its feats made possible by supply chains of exceptional length and complexity.” The most advanced operations tend to be located in either the U.S. or its allies, such as Japan, the Netherlands and Taiwan — three governments that have all signed on to the Oct. 7 restrictions.

“The entire industry can only function with U.S. inputs,” Chris Miller, a professor at Tufts University, said. “In every facility that’s remotely close to the cutting edge, there’s U.S. tools, U.S. design software and U.S. intellectual property throughout the process.” (Miller recently appeared on Ezra Klein’s podcast to talk about the global importance of semiconductors.)

So far, the semiconductor restrictions seem to be having an effect, analysts say. China is struggling to get as many advanced semiconductors as it needs and is instead trying to build up its domestic industry. Ultimately, it will probably succeed in doing so. By then, though, the U.S. and its allies hope to have raced further ahead.

The Oct. 7 rules are a telling sign of how much U.S. policy toward China has changed. For decades, presidents from both parties vowed that economic engagement would benefit both China and the U.S. As China became richer, the politicians claimed, its development would provide jobs for American workers, while China itself would become a freer country and more friendly to the West.

Only some of those promises came true.

China did become richer. Its rise has included arguably the most rapid decline of poverty in human history, improving the material living conditions of hundreds of millions of people. Many American investors and corporate executives also flourished, as their companies became more profitable by moving parts of the supply chain to China and by selling goods in China.

But China became less democratic, not more, in the process. Its rise has also hurt millions of U.S. workers more than it has helped them. One academic study uses the phrase “China shock” to describe the devastating effect on factory jobs and wages in many U.S. communities over the past two decades. People in these same places have become more likely to vote for extremist political candidates, the researchers found in a follow-up study.

Now U.S. policy makers of both parties are more often treating China as the rival that it has become. True, there are risks to this new approach — including an actual war, which could be devastating. And China and the U.S. will need to continue cooperating on some issues, especially climate change, even as they compete on many others.

By trying to keep the lines of communication open, Blinken, Yellen and their counterparts in Beijing can reduce the threat of misunderstanding and catastrophe. But they can’t change the fact that China and the U.S. are competitors, not allies. The two countries are indeed engaged in a great-power struggle.

What’s next: John Kerry, Biden’s special climate envoy, will arrive in China on Sunday to restart climate talks between the countries, the world’s two largest polluters. Congressional Republicans accused Kerry at a hearing yesterday of being soft on China.

  • Thousands of people evacuated their homes in Delhi after monsoon rains killed nearly 100 others in neighboring states. See photos of the flooding.

  • Extreme temperatures killed 10 people in Laredo, Texas. One man died in his truck, parked on a busy street with its hazard lights on.

Europeans overcame hurdles to create an economic union and a shared currency, and they can do the same for their militaries, Rajan Menon argues.

On “The Ezra Klein Show,” Tom Hanks has an antidote for America’s age of cynicism.

Here is a column by Paul Krugman on inflation.

A perfect shot: Marketa Vondrousova hit one of the best shots of Wimbledon. It sent her to the final, ending the Ukrainian player Elina Svitolina’s run.

The latest on James Harden: The disgruntled Philadelphia star still wants out, despite rumors of a possible Sixers reunion.

Retired at 28: Blake Martinez could be playing linebacker in the N.F.L. right now. Instead, he retired to sell Pokémon cards.

Double feature: In one week, two of the most-anticipated movies of the year hit theaters: “Barbie” and “Oppenheimer.” Many fans plan to see both on the same day, relishing the irony of seeing two star-studded films with such incongruous themes. One marketing manager told The Times that she and her friends had planned their day “the way the Lord herself intended: ‘Oppenheimer’ at 10 a.m. with a black coffee / ‘Barbie’ at 4:20 p.m. with a big Diet Coke.”

  • Lisa Marie Presley, the only child of Elvis Presley, died in January from a bowel obstruction, after a previous bariatric surgery.

  • Lola Tung describes how she is similar to her character in Amazon’s “The Summer I Turned Pretty.”

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Mohammad SHiblu

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