US recruits allies to counter China’s technological pressures

Preliminary talks with U.S. allies have begun, though the effort is expected to take months, senior officials said.

The strategy contains both offensive and defensive components. By combining the efforts, the US and its allies can spend a lot on China, of which the budget for research and development is now almost in line with the US. The alliances can also coordinate policies to deny China the technologies it needs to become a world leader.

“We have a very strong interest in making sure that techno-democracies come together more effectively, so we are the ones shaping the norms and rules,” Foreign Minister Antony Blinken said during his confirmation hearing.

The U.S. plans to organize different alliances, depending on the issue, said a senior administrative official, calling the effort a modular approach. The various groupings will usually include most of the industrial forces of the Group of Seven Nations, plus some others. (The idea is sometimes called the Democracy 10 or the Tech 10.)

An alliance focusing on artificial intelligence could include, for example, Israel, whose researchers are considered leaders in the field. One in terms of export controls is likely to include India to ensure that China is unable to import certain technologies. To encourage the countries to offend China in joining the alliances, the government may not announce their participation, the senior administration said.

Most importantly, say those who worked on the concept, the alliances should be flexible and avoid bureaucracy. “The creation of another international institution will lend itself to major announcements without doing anything,” said Anja Manuel, a former Bush State Department official. “With technology, you have to be smart.”

Among the areas considered mature for alliances are export controls, technical standards, quantum computing, artificial intelligence, biotechnology, 5G telecommunications and the rules governing surveillance technology. The list needs to be narrowed down, technology experts say. Too many efforts will take too long to organize and tax too many government officials.

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

Beijing has spent tens of millions of dollars over the past few decades trying to build a world-class domestic industry, but still lags behind Western competitors. The Biden administration wants to keep it that way.

During the Trump administration, the US worked with the Netherlands to stop the sale of semiconductor manufacturing equipment to China’s largest chipmaker, Semiconductor Manufacturing International Corp.,

which could help it produce leading-edge chips. The Trump Department of Commerce also restricted sales of disc-making equipment to SMIC.

The administration of Biden follows the curbs. According to a statement from the White House, Jake Sullivan, the national security adviser, Jake Sullivan, talked to his Dutch counterpart, Geoffrey van Leeuwen, about China and advanced technology, among other things.

Technologists describe semiconductor manufacturing equipment as a ‘choking point technology’ because it is dominated by only three countries – the US, Japan and the Netherlands – making it relatively simple to restrict. A semiconductor alliance is also likely to include major chipmakers in Europe, as well as South Korea and Taiwan.

Along with limiting technology to China, members can combine work on advanced R&D, including the manufacture of multimillion-dollar semiconductor factories outside China.

A high-profile effort is likely to raise concerns – and possible retaliation – from Beijing, which is working to reduce its reliance on foreign technology. Beijing has used its economic leverage to try to cut off US allies, including imports of wine and coal from Australia after Canberra called for an investigation into the origins of the coronavirus pandemic.

The addition of Taiwan, a major semiconductor manufacturer that regards Beijing as an apostate province, will add to China’s concerns.

A US-led semiconductor alliance “violates the principles of market economy and equitable 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. China is the world’s largest supplier of so – called rare earths – minerals that are indispensable for the manufacture of mobile phones, electronics and military equipment. In 2010, China restricted terrestrial shipments to Japan during a dispute over ownership of islands in the East China Sea, although China denies being involved in coercion.

China recently embarked on a new round of regulations on rare earths, questioning foreign companies about their dependence on Chinese production, which some tech experts see as a warning shot. The Chinese Foreign Ministry said Beijing was “prepared to meet as far as possible the legal needs of all countries in the world in line with the real capacity and level of China’s rare earth resources.”

Mr. Sullivan praised the ally’s opponent of China’s rare ground restrictions, and Mr. Biden has named the Obama administration’s Katherine Tai as the US Trade Representative.

Mr. Biden also recently commissioned a study on the U.S. dependence on foreign supplies of rare earth. U.S. officials are working with Australia and other countries to increase production and create synthetic substitutes for the minerals.

Reducing rare earth exports will have a setback by undermining China’s commercial reputation and encouraging mineral production elsewhere, said Martijn Rasser, a technology analyst at the Center for a New American Security. Washington, DC said.

Technological alliances are worth the risk of setbacks, he said. “Ultimately, the US wants to reduce or eliminate Beijing’s ability to use coercion.”

Write to Bob Davis by [email protected]