- MoA: U.S. Argues For More Protectionism And Subsidies Archived Message
Posted by t
on April 29, 2023, 1:22 am
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https://www.moonofalabama.org/2023/04/us-argues-for-more-protectionism-and-subsidies.html#more Last week Secretary of the Treasury Janet L. Yellen gave a speech on the U.S.-China economic relationship. I called it a declaration of war. Yesterday National Security Advisor Jake Sullivan held a speech on 'Renewing American Economic Leadership' which touched on some of the same themes as Yellen's speech. Sullivan argues that the U.S. must change course from opening markets and liberalization to targeted protectionism and subsidies for specific sectors. The main argument for it is 'national security' but the real aim seems to be the suppression of competition from others. In a core sentence Sullivan says: [W]e are protecting our foundational technologies with a small yard and high fence. As I’ve argued before, our charge is to usher in a new wave of the digital revolution—one that ensures that next-generation technologies work for, not against, our democracies and our security. We’ve implemented carefully tailored restrictions on the most advanced semiconductor technology exports to China. Those restrictions are premised on straightforward national security concerns. Key allies and partners have followed suit, consistent with their own security concerns. We’re also enhancing the screening of foreign investments in critical areas relevant to national security. And we’re making progress in addressing outbound investments in sensitive technologies with a core national security nexus. These are tailored measures. They are not, as Beijing says, a “technology blockade.” They are not targeting emerging economies. They are focused on a narrow slice of technology and a small number of countries intent on challenging us militarily. I do not understand what the 'small yard' is supposed to mean but the U.S. is indeed building a high fence. It is not a fence to protect the U.S. but a fence that is build to isolate China. The U.S., by pressing its 'allies' in Europe and Asia, is trying to deny China the ability to acquire or produce computer chips. The newest lithographic machines The Dutch company ASML produces are now prohibited from export to China. Its CEO says that if the restrictions are held up others will build similar machines: Wennink said at ASML's annual meeting on Wednesday that he was not worried about rivals in Japan, the U.S. or China being close to building cutting edge commercial lithography products. "But it can happen of course, so it is absolutely essential that we get to keep having market acess to China", which is the largest market for computer chips globally. "Market access is as important to us as it is to our Chinese customers," he said. The U.S. controlled neocons in German's government are under pressure to prohibit the export of some special chemicals used in the production of chips. The argument they use makes no sense: Habeck, who is also the vice chancellor, has advised officials in his department to work on a tool box of measures to strengthen Germany’s economic resilience in certain areas and reduce one-sided dependencies on China. The idea of imposing export controls on chip chemicals is part of these deliberations, the people said. How is stopping German exports to China supposed to reduce alleged one-sided German dependencies on China? It doesn't. Computer chips are not a 'narrow slice of technology'. They are used in many daily products. A modern car has some 1,400 of them. China has been importing chips for $300 billion per year. Confronted with U.S. attempts to block it from access to chips it has ramped up its own production and its imports of chips are now in steep decline: China’s chip imports slumped 27 per cent in the first two months of 2023 by volume, according to China’s customs data published on Tuesday. China imported 67.6 billion integrated circuits (IC) in January and February, down 26.5 per cent from the same period last year, according to data released by the General Administration of Customs. The drop was steeper than the 15.3 per cent decline recorded for all of 2022, which was the country’s first annual fall in IC imports in two decades. Sullivan's whole speech is an argument against free markets and for protectionism and sector subsidies. It does away with the economic framework the U.S. had build after the end of the second world war. This is supposed to be replaced it with bilateral and block wise agreements that are to the advantage of the U.S., to the disadvantage of its agreement 'partners' and which exclude China and other 'hostile' economies. The so called 'decoupling' or 'de-risking' from China is actually an attempt to isolate it. It creates a dynamic that will lead to import replacements in China. This will lower exports to China from the U.S. and its allies. The whole scheme will thereby eventually work to China's advantage. Posted by b on April 28, 2023 at 16:44 UTC |
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