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  • HOMEPAGE >> BLOG >> Tit for Tat – Escalation in Tech Wars Continues as China Alleges “Hysteria” and “Hegemonic Manner” on the Part of U.S.

Tit for Tat – Escalation in Tech Wars Continues as China Alleges “Hysteria” and “Hegemonic Manner” on the Part of U.S.

While on the surface the Biden Administration and its counterpart in Beijing have been working to “calm the waters” between the two superpowers, and Chinese state media took an almost conciliatory tone, the Tech Wars bubbling beneath the surface have been intensifying, and the arrows continue to point increasingly towards confrontation.

This week, a China Daily editorial zeroes in on provisions of the National Defense Authorization Act passed by Congress on December 22, which prevents the Pentagon from procuring batteries from Contemporary Amperex Technology Co. Ltd, BYD Co., and four other Chinese companies.

The China Daily was quick to dismiss the impact of the restrictive measure to “likely be limited given that it is still several years before the ban takes effect” and does not extend to commercial purchases, allowing, for instance, Ford Motor Co. to continue licensing technology from CATL for its electric vehicle batteries,” however, as Anna Ashraf points out in a piece for Benzinga Financial News and Data“industries and lawmakers often use such rules as guidelines to determine trustworthy materials, products, and companies for their business operations.”

The China Daily piece goes on to accuse U.S. policy makers aiming to curb Chinese influence over U.S. supply chains of “hysteria” arguing that “rather than seeking win-win cooperation with China in the sector that will determine the future of the energy transition, some US politicians have sought to politicize the issue, by unveiling rules aimed at keeping Chinese components out of EVs sold in the US.”

Editors argue that recent high level government working group meetings indicate that “the trend of easing tensions between the two countries still continues, and will not be easily reversed by disruptive moves such as that to curb China’s EV industry boom,” however, over the course of the last few days, the rhetoric of China’s government officials in Beijing and emissaries abroad has a taken a sharper edge, as evidenced most recently by remarks by China’s ambassador to the Netherlands in response to U.S. chip-equipment curbs, telling journalists in an interview that “if the Americans treat us in a hegemonic manner, we will of course respond.”

These remarks follow on the heels of Chinese Ministry of Commerce publicly alleging that the U.S. is weaponizing export controls and using them as a tool earlier this month in reference to questions about Dutch chipmaker ASML, which, per Dutch government directive, has stopped its exports of certain chip components to China, supposedly due to U.S. pressure.

In light of the stakes and the extent of Chinese control over critical mineral supplies, U.S. policy makers’ efforts to bolster domestic supply chains hardly amount to “hysteria,” but rather a growing awareness and willingness to finally tackle an acute challenge, particularly as relations between the Washington and Beijing, in spite of high-level diplomacy and working group meetings, continue to sour.

The U.S. has taken a few steps to reduce its critical mineral supply chain vulnerabilities in recent weeks. The question is, how will China respond.

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