Weakness of US' 'iron chip curtain' exposed: China Daily editorial

According to a Reuters report, the Joe Biden administration plans to expand the so-called Foreign Direct Product Rule to more Chinese semiconductor fabrication factories.

The Rule that was first introduced in 1959 gives the US government the power to control the trading of US technologies, including in products made in a foreign country. The Biden administration has employed the provision to ban foreign companies from exporting semiconductor manufacturing equipment and advanced chips that contain US technologies or parts to Chinese companies.

Yet Japanese, Dutch and Republic of Korea companies, including Tokyo Electron and ASML, the two largest chipmaking equipment manufacturers, along with companies from 30 other countries and regions, are to be exempted from the expanded controls. That companies from Malaysia, Singapore, Israel and China's Taiwan island, are not exempt serves to expose the symbolic nature of the move as part of the Democratic Party's China-bashing stunts before the presidential election.

The other takeaway from the move is that more and more US allies are starting to distance themselves from the Biden administration's "chip war" against China in fear of being left high and dry should the former "America-first" US president prove successful in his bid to return to the White House. In other words, instead of showing the success of its "chip alliance" scheme to thwart China's high-tech progress, the prospective new rule indicates that the "united front" the Biden administration has painstakingly formed over the past more than three years is beginning to collapse.

Since the US Commerce Department says that it categorizes countries and regions "based on factors like diplomatic relationships and security concerns", it might be the good relations that Malaysia and Singapore have with China that are the reason the two Southeast Asian countries are not exempted from the expanded export ban.

Given the fraught cross-Strait relations thanks to the US' interference, the only reason that the Taiwan island is not to be granted the pardon is that Washington knows its proxies in Taipei do not have the audacity to bark. As long as the move can further estrange the two sides across the Taiwan Strait economically, Taipei, in the view of its US ally, should feel grateful to the latter's assistance to its "pro-independence" agenda, even at the cost of relevant companies on the island.

And given the strong support Israel counts on the Biden administration now over the Middle East situation, its non-exemption status is not surprising, as there is always a price to pay for US help.

Meanwhile, US semiconductor manufacturing equipment companies, such as the California-based Nvidia and Lam Research, will certainly be among the victims of the move, which means that their major competitors in more than 30 developed economies, can compete in their absence for their previously sizable share of the Chinese market.

As a matter of fact, the chip-related deals between China and Japan, the Netherlands and the Republic of Korea have kept rising steadily over the past years as companies from the latter have found plenty of ways to steer clear of the US government's de facto coercion. Which might be a practical factor spurring the Biden administration to issue the new rule signaling that it will allow them to trade with China, making the move a face-saving attempt.

The marked rise in the share price of ASML, Tokyo Electron and some other exempted companies upon the release of the news speaks volumes of the market's optimistic sentiment about the demise of the "iron chip curtain" the US has tried so hard to draw around the world's largest chip market.

The rise and fall of that "iron chip curtain" clearly demonstrates that the Biden administration is not only trying to coerce its allies to contain China but also playing the "China card" to exploit its allies.