Unlike past measures used during the cold war, America’s latest sanctions seek to deny China access not just to advanced weapons or narrowly defined technologies, but to undermine whole industries
It is not just small operators who are feeling the effects of the sanctions. Before the new rules were imposed in October, Yangtze Memory Technologies Corp , a big state-owned maker of memory chips, was widely seen as the Chinese firm with the best chance of becoming a global force in chipmaking. Overnight, however, it and all other Chinese firms’s inability to procure this gear, in turn, has stopped it from finalising a business plan for 2023, analysts say.
Such advances may prompt America to modify its sanctions on chips, says Bill Drexel of the Centre for a New American Security , a think-tank in Washington. It might choose to focus purely on the computational power of chips. This is a simpler approach than trying to find a “sweet spot between computing power and interconnect bandwidth”, says Mr Drexel. But it would entail broadening the restrictions to less powerful chips.
All these measures, however, have drawbacks. Barring Americans from collaborating with foreigners in research on quantum computing, for instance, would set back the American industry as well as the Chinese one, by preventing it from recruiting talented foreigners. The new system is meant to “plug all the holes” created by the many American strictures on Huawei, say analysts at Jefferies, an investment bank. Thesystem was developed alongside a home-grown operating system that has helped further diminish ties with foreign suppliers.
America is moving so quickly that it has not always managed to persuade its allies to form a united front. Thes issued in October, for instance, were announced before it had secured the support of the Netherlands, South Korea and Japan. Yet these countries make lots of advanced chips and chipmaking equipment. If they do not go along with America’s new rules, the attempt to blockade China will fail.
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