The US chips war against China will fail.

Q: How might China's technological advances be affected by the U.S. export controls on semiconductors?

A:

Economists adore the market economy very much, at least before the US trade war against China. Read an economics textbook. Take a 101 economics. Economics says the market allocates resources most effectively.

Yet, for many thing China want to buy from the market, the US blocks the supply chain and forbids the suppliers to access the China market. It is bad for the US suppliers, and the suppliers of its allies, and bad for the world economy. Because what the US has been doing is to destroy the market economy in the global market.

The US has a technological advantage and enjoys a monopoly to earn surplus profit. If China advanced its technology, the US should compete with China in the market, not to use state power to disrupt the world market. The US abuses its monopoly power at the expense of the well-being of the world.

So the US interest conflicts with the interest of the world. The US export controls are bad for everyone, including the people of the US. Now the US is undergoing inflation, which is the result of the US trade war against China, because it sabotaged the world market and made the world economy less efficient.

However, the inflation in China is much less than in the US. It shows that the US trade war and chip war against China hurt the US more than hurt China. You go to the grocery and you will feel it.

So is for technology. The US export control will hurt the US more than hurting China.

China experienced a century of humiliation and lagged behind the West in technology. Because its technology lags behind, China has difficulty advancing its technology as the market is virtually all taken by the West. China does not lack talent. Chinese talent is in the US due to the difference in living standards. This is the well-known phenomenon of brain drain: talent in developing countries flows into developed countries. Try to glance at the authors of research papers from academic journals, you'll find many Chinese names.

With the US export control, China suddenly has a large market for its indigenous entrepreneurs. Meanwhile, the US companies suddenly lack the market incentive to develop technology. There is no market large enough for its technology. Besides, they have no business decision to make. All decisions for the tech firms are now geopolitical decisions from Congress and the White House. So the US tech firms can be better run by lobbyists or politicians than by businessmen,

When the US puts sanctions on China, it feels superior, powerful, and ecstatic. But in the long run, China will surpass the US in technology for sure. The chips war destroyed the morale of the US tech firms. They don’t need to invest in R&D. They are relying on politics. They can lobby Congress to sanction its competitors and have Congress grand them subsidize. The CEOs can have better income just by lobbying Congress. They quit the market economy. They embrace geopolitics. Do you know how expensive is an F-35? Yes, the chips made by the US will be very expensive, because it is national security. And the chips made by China will be very cheap and occupy the world market.

The US chip war will backfire.