China is finished...
In the battle between hegemonic systems it seems America has won...
What US was able to do last week was get Taiwan to on-shore its TSMC factory to America, so that even if a confrontation in the South China Sea ends up with losing Taiwan the US will still have home-grown EUV microprocessor capabilities whilst banning China from access to these chips, including the machines that produce the chips (ASML) and the entire supply chain surrounding all of this (German Carl Zeiss etc)...
By lowering the De minimis U.S. content rule from 25% to 10% and now down to 1%/zero percent, China won’t be able to source chips anywhere, even from non-US firms, and they will have hard time to even source the machines that build the machines that build the chips, as any supplier that has even 1% US content won’t be allowed to export to China to help China build a homegrown processor/fab capabilities... The intent of this is to throw China back into the stone age. Make no mistake, this is the America cutting off Japan from oil moment we just witnessed... Did you guys know China actually spends more money importing computer chips than it does oil? This is how critical processors are to China.
Make no mistake, this ban is not limited to just Huawei, infact I have on good authority that SMIC (Chinese mainland version of TSMC that is years behind) is next, and a total blanket ban of all processors to China soon to follow after that. SMIC won't be able to catch up in time, and Huawei's entire 5G base station chips were designed for 7nm process, meaning not only does this kill Huawei's bread and butter of being able to export 5G (70 contacts signed worldwide) thus giving that business to US /Western companies but in fact it will even make it impossible for China to complete the rollout of its own domestic 5G market, meaning China will have to use American 5G (TSMC is being set up in Arizona with plans to buy Greenland for the rare earth minerals to get ahead of China using the rare earth card etc and Trump plans to buy Nokia and Ericcson to transfer 5G tech to USA not to mention Marco bill to invalidate Huawei 5G patents paving way for Verizon/AT&T to use them freely etc) or none at all, and during a time of war when US decides to attack China mainland coast after first taking the SCS or Taiwan, it can flip a switch and basically electronically shutdown all of China to cut off the Chinese C&C and cause mass chaos and panic throughout the mainland.
Without the ability to climb the tech ascension chain ("Made in China 2025") this will cause China to be stuck in the so called Middle Income Trap... it is almost impossible to do this if China cannot find a workaround to the bans which deprive it of access to state of the art fabs /chip making processes etc. How can China continue to expect to be world's factory if it is denied microprocessors? How can China climb the tech ascension if its 5G/ AI and other dreams are dashed due to not having the access to chips?
On the other hand, if AI pans out and in the future US can have fully automated factories that need no human labor, then no longer is the need to outsource to cheaper places like India, Mexico, China, etc because nothing is cheaper than AI which runs on electricity costs for labor... Globalization could be going in reverse in that sense and automation will mean supply chains returning local again.
The biggest issue is that of peak global resources , be it peak oil, peak minerals, peak fresh water, peak top soil. So in that perspective the world really is a zero sum game and Chinese rising standards of living in aggregate means less piece of the pie for everyone else, including Americans. If the end goal is to shutdown China (crater its GDP) then that would be bigger pieces of the pie for the rest of the world, and that would directly and proportionately benefit the US by far the most in terms of rising standards of living. The real wages in the US haven't risen since the 1970's...a good part of it is due to China's rise in standards of living taking ever larger slices of the pie. So this could be what Trump meant when he said he was going to MAGA
No matter what happens, Trump just dropped the hammer on China and this is the inflection point of the second cold war and so far America seems to have the clear advantage / leverage.
Tidalwave is wrong about one thing, he keeps talking about in terms of what makes economic sense, that 5nm is not economically viable without Chinese market... but politics trumps economics.. especially when America is using this as weapon to contain and erase China and US still has the luxury of the petrodollar hegemony and USD as global reserve currency affording it to print its way out of this issue and making the rest of the world pay for the decoupling.
Fusion is still 40 years away from real application, oil is running out, climate change is real, we have past peak resource globally and population overshoot is a real thing...
The only way Americans can sustain their non-negotiable way of life is to start harvesting China in a sort of Plaza Accord 2.0; but since "trade talks" broke down last year and Xi/CCP made it clear that China wasn't going to let itself be colonized/harvested by the West then the US had no choice but one choice left, to completely crater China GDP by cutting it off from computer chips....
In the long run if US can regain tech preeminence and full spectrum dominance it can become a leader in AI, and if it wins AI and 5G/6G and gets in front, (no matter what tactics it uses) then it won't even need China anymore for manufacturing at all!
Very few people can see what I see, the big picture, we live in a post-peak resource world, and so its not only zero sum, its ever shrinking slices of the pie! Red queen race! US has to run faster and faster just to stay in place, it was storing China up like a piggybank counting on harvesting China by now but the Chinese did not play ball and so the only way is for US to start manufacturing itself locally using AI and automation whilst crashing Chinese GDP now that China is useless to America and just another 1.4 billion extra mouths to consume ever dwindling global resources!
