The supply chain disaster devouring Christmas is driven by the Biden-Xi dispute that many ignore
The supply chain crisis is one of the biggest stories of 2021, but it can be traced back to the last decade.
The “trade war” between the US and China in the Trump years involved semiconductor chips – the exact shortage that has crippled the global economy.
Biden does not change course from Trump, leaving Americans without personal electronics and cars.
The holidays are coming, and that supply chain crisis You’ve probably heard that it will make shopping miserable.
Hundreds of thousands of ships full of goods imported from Asia stacked outside Los Angeles and other major ports. US automakers don’t have enough semiconductor chips To make many cars that people want to buy. Every other product – from games to computers – that needs a chip will also be out of stock.
What is often overlooked is that official US government policy is directed at making these microchips more difficult for China to manufacture. US President Joe Biden continuestrade warWith his Chinese counterpart, Xi Jinping, which began under Donald Trump, he is not closing his eyes as the supply chain crisis is putting Christmas at risk.
The ship-and-chip crisis is another way America and China are on the verge of “breaking up,” as the Trump-era trade war intensifies into the new status quo. People hoping for an easier holiday shopping season ignore how long and painful this transition can take.
The US-China trade war has left the US with a shortage of electronics and cars
United State representing only 12% Of the global chip production, Asia makes up 75%. according to Report From the Semiconductor Industry Association, which expects China to become the largest producer of chips by 2030.
But Donald Trump ran on a largely anti-globalization platform in 2016, focusing in particular on how America is “stolen” by China. The chips were a sphere of influence.
China is not just an exporter of chips, it also needs a steady supply of particularly sophisticated integrated circuits from other countries, including the United States, to fuel its consumer electronics manufacturing machine. In the past decade, China has been import More and more chips are from the United States, because they need to be fed into electronic products that are shipped back around the world.
China is lagging behind in making the most advanced chips. For example, the world’s largest semiconductor company, Taiwan Semiconductor Manufacturing Corporation (TSMC), is developing very small chips with a size of 3 nanometers and smaller. Semiconductor Manufacturing International Corporation (SMIC), the largest chip company in China, began manufacturing 14nm chips in late 2019.
The United States is determined to make China’s industrialization efforts difficult.
Last September, the Trump White House export restrictions on SMIC, forcing it to supply parts elsewhere and reconfigure supply chains in the process.
Meanwhile, companies Buy their chips from SMIC They had to go elsewhere, only to find out that the alternative chip manufacturers were too Already at full capacity. America has struggled to rely on its own production, as Intel, the leading American semiconductor giant, has struggled its own production problems. Some companies stock chips, TSMC CEO Mark Lowe claims, which makes the potato chip crisis worse.
It was the Biden administration Recruit her allies To freeze China out of the technological equipment it needs, making sourcing more difficult for the country.
All of this happened after the pandemic shut down semiconductor manufacturing operations for months into 2020, driving up prices for new and used cars and shortages of all kinds of electronics.
Biden does not change course
Those who hope that the Biden administration will reject Trump’s guidelines have been sorely disappointed.
The president has done little to alter his predecessor’s aggressive business stance since taking office eight months ago. US Trade Representative Catherine Taye confirmed the hawkish policy would continue in a speech on Monday.
“For too long, China’s lack of compliance with global trade norms has undermined the prosperity of Americans and others around the world,” she said in a letter at the Center for Strategic and International Studies, adding that it was “increasingly clear” that China didn’t address US concerns.
Biden said earlier this year that the key to overcoming the current chip shortage crisis is to invest in chip production in the country, allocating US$50 billion (AU$68) in his domestic chip manufacturing incentives infrastructure plan. “The plan I am proposing will protect our supply chain and revitalize American manufacturing,” he said in April. During a virtual summit With automotive executives and other business leaders. Of course, Biden was talking about “our own supply chain” – meaning an American chain – not a “globalized” supply chain.chimericaSupply Chain in the early 2000s.
The Biden administration has recently made confronting China the centerpiece of its foreign policy agenda, Until the reorganization of the CIA To make China a major focus. The CIA described the country as a “primary competitor”.
It would be easier said than done. American manufacturers are unfamiliar with expensive American labor, so they will need time to weed out contracting foreign manufacturers, Recode He pointed out. Meanwhile, it may take years to set up new production facilities.
The Americans, then, are ready to endure a long confrontation. A JP Morgan memo on Friday by a team led by Jahangir Aziz said US-China trade tensions are set to remain a “concrete risk”, as China is in the midst of a “shift in the economic policy regime” and “the intensification of the US and China. It has entered Tensions since 2018 are at a relative standstill.”
Speaking Friday after a disappointing jobs report highlighted the difficulties of economic recovery, Biden called again for his infrastructure plan, which is struggling to make its way through Congress.
He stressed America’s need to regain leadership and become more “competitive,” and highlighted one country that outsmarts America and spends it on its infrastructure and economy: That country was China. That could mean a lot of fat-free birthdays.