Aggressive competition between the world’s two largest economies has long been a visible reality in much of the world, at least since the reign of the superpower was taken over by the predecessor of the current US president. However, the technological war between Washington and Beijing, and the processor war in particular, is at the heart of this rivalry, perhaps because 90% of the most advanced processors are made in Taiwan, an island that China has historically been part of and has repeatedly been considered a part of. threaten to take over by force. The scale of dependency, with the rise of China looking set to actually challenge US global dominance, has prompted Washington to try to boost domestic processor production with a $52 billion package it has adopted since last year. However, at the same time, the superpower is trying to prevent China from producing the most advanced processors used in artificial intelligence applications, especially for military and military purposes. And, of course, the search for allies in the confrontation with the Asian financial giant was only a matter of time. And, apparently, she considered the Europeans and European economies to be her natural allies, which, probably, with some delay in recent years, have taken care of both their dependence and competition from China.

Washington, with a $52 billion package, is trying to boost U.S. processor production.

On the sidelines of the G20 summit last November, US President Joe Biden was unequivocal that Washington was determined to “compete vigorously” with China. About a month earlier, on October 7, 2022, it unilaterally imposed severe restrictions on processor exports to China, with the ban specifically targeting the most advanced microprocessors designed for artificial intelligence applications. However, for its part, EE doesn’t seem to see a complete alignment of interests with Washington when it comes to relations with China.

Just in January at Davos Commission President Ursula von der Leyen stressed that the EU. wants to “get rid of the Chinese threat”, not “separate from China”. Until a few days ago. The Netherlands announced this week that it would impose restrictions on the export of technology for the production of “the most advanced” microprocessors. In a letter to the Dutch parliament, Dutch Trade Minister Lise Schreinemacher stressed that the export ban would be introduced, but would be applied with “surgical precision” to highly specialized systems producing the smallest and most advanced microprocessors. He even referred to the need to protect national and international security. And he clarified that all companies in the country interested in exporting high technologies must apply for the necessary license. And, of course, first of all we are talking about the Dutch microprocessor industry ASML, a company that alone produces 100% of the most advanced and indispensable microprocessors for the computer manufacturing industry.

Washington builds alliances

Washington’s pressure on the Dutch government began in 2018. The US government has systematically called on The Hague to ban ASML from exporting its most advanced processors to China. He cited the risk that Chinese industry could soon switch to military-grade processors. In practice, of course, American industry develops at least 95% of the processors needed for artificial intelligence programs that are used in China. They also manufacture equipment used in all Chinese processing industries. This means that the ban on the export of American technology to China is a decisive obstacle to Beijing’s ambitions to become a leading power in artificial intelligence technologies and, above all, to its goal of achieving self-sufficiency in the field of processors. Yet US officials are besieging governments from London to The Hague to secure their alliance in a processor war. Because, after all, Europe is in complete solidarity with Washington on the war in Ukraine, they used the argument that China could send Russia high-tech weapons systems, such as unarmed aircraft known as drones.

Interpreting Washington’s persistence in putting pressure on Europe, political and economic analysts note that without allies, Washington’s unilateral ban could not only be ineffective, but even harmful to US interests. If the US industry stops exporting processors and technology in general to China, without forcing the industries of other countries to make the same strategic choice, some other industries, some other countries can fill this gap. In this case, American industry will lose its share of the world market. This is why Washington systematically pressured the Netherlands, as well as Japan and Taiwan, to get involved in the processor war. It is not surprising, of course, that Taiwan was the first to respond to Washington’s request, since the Biden administration has openly promised to defend it in the event of a Chinese invasion. After all, the island nation has repeatedly accused Beijing of industrial espionage in the processor industry. Thus, Taiwan has announced since October 8 that it will not allow Chinese processor manufacturers to enter into contracts with Taiwanese manufacturers. If the Taiwanese industry cooperated with the Chinese, it would be easier for them to produce those processors that China can no longer import due to the US embargo.

The fears of Europeans and Biden’s “gift”

While this text was being written, Commission President Ursula von der Leyen was meeting with the American President. According to the European magazine Politico, Washington is trying to secure Europe’s alliance in the technological war against China in two ways: on the one hand, warnings about the dangers, and on the other, through a kind of bribery.
The warnings concern the prospect that China will offer weapons to Russia and effectively support it in the war against Ukraine. Europeans opposed this prospect, and German Chancellor Olaf Scholz warned Beijing that such a move was unacceptable.

However, Ms von der Leyen was much more careful and avoided repeating Washington’s arguments. On the bribery aspect, according to Politico, Washington is trying to lure Europe by promising that European industries will receive the same support and subsidies as Biden’s green tech package.

The Netherlands may have joined Washington’s camp this week, but Europe is showing a sort of ambivalence about the technology war between the world’s two largest economies. As Politico notes, the EU does not appear to be all that inclined to move away from the lucrative China market, let alone Germany, with which it has close trade ties. Speaking to a European magazine, Heather Conley, a former US State Department official, noted that “Europeans have already suffered a deep economic trauma as they have ended their energy cooperation with Russia and they cannot even think of doing something equivalent to China.” . .

Perhaps, however, the countdown has begun for Europe, which in recent years has realized the extent of its dependence on China, as well as the transformation of China from partner to competitor. Especially for Germany, which has been concerned about Chinese encroachment on its industry in recent years.

Finally speaking in Davos in January of the EU’s intention to reduce its reliance on China for key raw materials, Ms von der Leyen signaled her intention to strike a deal with Canada to obtain rare and other raw materials such as lithium and cobalt. We are talking about strategically important raw materials that it supplies from China in the vast majority of 98% of its supplies, especially in rare earth elements.

Dispute

Ambridge Colby, a former U.S. Department of Defense official, notes that U.S. officials are betting that Europe will engage in a confrontational battle with China, but the leaders of Europe’s largest economies have openly said they do not want to secede from China or join sanctions against it.

52 billion Washington has committed itself to supporting the American manufacturing industry.

Security Reasons

Announcing the Dutch government’s decision to join Washington in the processor war with China, Dutch Commerce Minister Lisa Schreinemacher said that “Given technological developments and the geopolitical environment, the government has concluded that the ban on processor exports should be extended to protect national and international security. “.

20% shares of Chinese companies supplying China’s microprocessor industry rose.

Answer

The reaction of the Chinese Ministry of Foreign Affairs to the decision of the Netherlands to ban the export of processors to China was immediate, with the representative of the Ministry, Mao Ning, stressed that “China fundamentally disagrees with the intervention of the Netherlands and the restrictions caused by these measures for the smooth trade between Chinese and Dutch companies.”