Global supply chains are no place for US to play clique-building games

The global shortage of chips due to the substantial and unanticipated swings in demand caused by the COVID-19 pandemic has increased awareness of the importance of the semiconductor supply chains. Because other countries’ governments have invested ambitiously in chip manufacturing incentives and the US government has not, three-quarters of the world’s chip manufacturing capacity is now concentrated in East Asia, with China projected to command the largest share of global production by 2030.

Those two factors have spurred the United States to action. On Tuesday, the US Senate took the first step to advance what lawmakers are calling “CHIPS-plus”. The bill provides billions of dollars in subsidies and tax credits for the semiconductor industry on condition that the operations involved are based in the US and the recipient companies don’t have plants on the Chinese mainland. The bill is expected to be passed next week.

Before US Treasury Secretary Janet Yellen’s visit to the Republic of Korea, the US pressed it to join the Chip 4 Alliance that it has proposed. Seoul has not agreed with nor declined the US request to form the strategic alliance along with Japan and the Taiwan island, exposing the dilemma Washington has put it in.

And it is not just the chip supply chains that Washington wants to exclude China from. Also on Tuesday, in a speech in Seoul, Yellen sought to drum up support for “friend-shoring” among US allies with a view to reshaping supply chains to exclude China.

While in a virtual Supply Chain Ministerial Forum the US hosted with 17 allies on Tuesday, the Biden administration tried to draft a framework for their decoupling from China.

Ironically, the forum that was held with the stated objective of sustaining the global supply chains was actually convened to do the opposite.

No doubt to the dismay of many in Washington, due to the resilience of its economic fundamentals, rather than being decoupled from the global economy China is assuming a more important role in advancing the global economic recovery.

China’s foreign trade has continued to grow remarkably with almost all its major trade partners, including the US. Likewise the foreign investment in actual use in the country.

While China is trying its best to promote free trade and common development, the US is leaving no stones unturned in its efforts to shatter the global supply chains by shamelessly politicizing trade, commerce and technology, and weaponizing the dollar and human rights issues.

The US is trying to block the way for China, but it is instead blocking the way for itself and others.