Secretary of Commerce Or Controversy?

U.S. Secretary of Commerce Gina Raimondo made a high-profile trip to China last August. There, she talked up the “enormous” Chinese market and the incredible “appetite among U.S. businesses to continue to do business” there. While no significant deals were unveiled during her visit, it did leave the impression that the White House intended to continue open dialogue and continue doing business with China.

Fast forward a few months and Raimondo seems to be singing a different tune. On December 11, 2023, in an interview with Bloomberg News, she said she was prepared to crack down on Huawei Technologies Co. But what did the Chinese telecommunications giant do anger her?

In short, some Washington politicians became convinced that a semiconductor chipmaking breakthrough in Huawei’s latest smartphone could only have happened with cooperation from a U.S.-based corporation.

As a result, the U.S. House Committee on Foreign Affairs quickly determined that some kind of “export control violation” had taken place. Put more bluntly, the committee believes that a U.S. company ignored government efforts to prevent China from receiving the most sophisticated chips that can be used to produce cutting-edge smartphones and other communication devices.

The Chinese Foreign Ministry responded the following day by stating the U.S. was “undermining the rights of Chinese companies,” while also refusing to uphold the standards of a market economy, an economic system where two forces, known as supply and demand, direct the production of goods and services.

In August 2023, Huawei released its Mate 60 Pro smartphone. It contained 7-nanometer (nm) chips, which the U.S. believes China has not yet been able to produce. As a result, U.S. Congress and the White House have zoomed in on California-based multinational technology nd company Nvidia to determine whether it is selling these chips to China.

Interestingly, Japanese newsweekly Nikkei Asia reviewed the Mate 60 Pro’s components and concluded that the smartphone “uses a 7-nm chip designed by HiSilicon (a Huawei subsidiary) and manufactured by China’s Semiconductor Manufacturing International Corp.”

One wonders what would frighten the West more: That a U.S. company is selling such chips to China or that China is producing its own.

In October 2023, the White House announced plans to prevent Nvidia and other companies from selling top-of-the-line artificial intelligence (AI) chips to China.

And guess who recently spoke out in support of the plan? You got it: Raimondo.

Last December, Raimondo issued a warning to Nvidia, advising the company to stop reformatting AI chips for China that move around export restrictions. “We cannot let China get these chips. Period,” she said. “We’re going to deny them our most cutting-edge technology.”

But if both Democrats and Republicans were initially nodding in support of Raimondo, they no longer are today.

Why?

Keep in mind that Raimondo has regularly preached the White House’s message that decoupling from China is a bad idea. As she prepared to leave Beijing last summer, she said, “We can’t drift to a place of greater conflict. It’s not good for the U.S., it’s not good for China, it’s not good for the world.”

And yet roughly three months later, there Raimondo was, saying she was ready to make it as difficult as possible for Huawei to maintain its strong position in telecommunications.

One is left to wonder at this point if the multiple visits to China made by top White House officials this past summer were nothing but a charade. Perhaps the goal was to present a positive message in order that Chinese President Xi Jinping would meet with U.S. President Joe Biden in the leadup to the November 2023 APEC meeting in San Francisco, California.

With this year’s presidential election already on the minds of many Americans, it seems likely that Biden will say and do even more to convince a skeptical electorate that he is tough on China and deserves to be reelected.

The U.S. business community might not like that. BR

One wonders what would frighten the West more: That a U.S. company is selling such chips to China or that China is producing its own