The U.S. is enlisting allies to counter China’s technology

Preliminary talks have begun with US allies, although the effort is expected to take months, senior government officials said.

Strategy has both offensive and defensive components. By combining efforts, the United States and its allies can far outnumber China, whose research and development budget now almost matches that of the United States. Alliances can also coordinate policies to deny China the technologies it needs to try to become a world leader.

“We have a strong interest in ensuring that techno-democracies come together more effectively, so it is we who are shaping these rules and regulations,” said Secretary of State Antony Blinken in your confirmation hearing.

The US plans to organize different alliances depending on the issue, said a senior administration official, who described the effort as a modular approach. The different groupings would generally include most of the industrial powers of the Group of Seven Nations, plus a few others. (The idea is sometimes called Democracy 10 or Tech 10.)

An alliance focused on artificial intelligence, for example, could include Israel, whose researchers are considered leaders in this field. One of the export controls will likely include India, to make sure China cannot import certain technologies. To encourage countries that are wary of offending China to join alliances, the administration may not announce its participation, the senior administration official said.

Crucially, say those who have worked on this concept, alliances must be flexible and avoid bureaucracy. “Creating another international institution will lend itself to big announcements without anything being done,” said Anja Manuel, a former Bush State Department official. “With technology you have to be agile.”

Areas considered ripe for alliances include export control, technical standards, quantum computing, artificial intelligence, biotechnology, 5G telecommunications, and regulations governing surveillance technology. Technology experts need to narrow down the list. Too much effort would take too long to organize and over-impose government officials.

Semiconductor technology is at the top of the administration list because computer chips fuel the modern economy. China is the largest semiconductor market in the world, but more than 80% of chips, especially advanced ones, are imported or produced by foreign companies in China.

Beijing has spent tens of billions of dollars over the past few decades trying to build a world-class domestic industry, but it still lags behind Western rivals. The Biden administration wants to continue like this.

During the Trump administration, the U.S. worked with the Netherlands to block the sale of Dutch-made semiconductor manufacturing equipment to China’s largest chip maker, Semiconductor Manufacturing International Corp.,

which could have helped him produce cutting-edge chips. The Trump Department of Commerce also restricted sales of chip manufacturing equipment to SMIC.

The Biden administration is monitoring the curbs. In February, National Security Adviser Jake Sullivan spoke with his Dutch counterpart, Geoffrey van Leeuwen, about China and advanced technology, among other topics, according to a White House statement.

Technologists describe semiconductor manufacturing equipment as a “suffocation point technology,” as it dominates only three countries (the United States, Japan, and the Netherlands), making it relatively easy to restrict. A semiconductor alliance will also likely include large chip producers in Europe, as well as South Korea and Taiwan.

Along with restricting the technology to China, members could pool advanced R&D work, including financing multimillion-dollar semiconductor manufacturing facilities outside of China.

A high-profile effort is bound to arouse concern – and possible retaliation – from Beijing, which is working to reduce its dependence on foreign technology. Beijing has used its economic weight to try to summon U.S. allies, including cutting Australian wine and coal imports after Canberra pressured to investigate the origins of the coronavirus pandemic.

Adding Taiwan, a major semiconductor producer that Beijing considers a renegade province, would add to China’s concern.

A U.S.-led semiconductor alliance “violates the principles of a market economy and fair competition and will only artificially separate the world and destroy international trade rules,” China’s foreign ministry said in a statement.

Beijing has a lot of levers to pull off. China is the world’s leading supplier of so-called rare earths, minerals essential for producing mobile phones, electronics and military equipment. In 2010, China limited shipments of rare earths to Japan during a fight for ownership of islands in the East China Sea, although China denied involvement in coercion.

China has recently launched a new round of rare earth regulations and questioned foreign companies about their reliance on Chinese production, which some technology experts consider a warning feature. China’s Foreign Ministry said Beijing “is willing to meet the legitimate needs of all countries in the world as far as possible in accordance with the capacity and real level of rare earth resources of the China “.

Sullivan has praised past Allied opposition to China’s rare earth restrictions and Biden appointed the Obama administration’s chief executive, Katherine Tai, as the U.S. trade representative.

Biden also recently ordered a study of the U.S.’s dependence on foreign supply of rare earths. U.S. officials have been working with Australia and other nations to boost production and create synthetic substitutes for minerals.

Follow Martijn Rasser, technology analyst at the Center for New American Security, a think tank of the Center for New American Security, would cut rare earth exports against China’s trade reputation and encourage production of minerals elsewhere.

Technology alliances are worth the risk of rebuffing, he said. “Ultimately, the U.S. wants to reduce or eliminate Beijing’s ability to use coercion.”

Write to Bob Davis to [email protected]