Adds certain advanced and high-performance computing chips and computer commodities that contain such chips to the Commerce Control List (CCL);
Adds new license requirements for items destined for a supercomputer or semiconductor development or production end use in China;
Expands the scope of the Export Administration Regulations (EAR) over certain foreign-produced advanced computing items and foreign-produced items for supercomputer end uses;
Expands the scope of foreign-produced items subject to license requirements to twenty-eight existing entities on the Entity List that are located in China;
Adds certain semiconductor manufacturing equipment and related items to the CCL;
Adds new license requirements for items destined to a semiconductor fabrication “facility” in the PRC that fabricates ICs meeting specified. Licenses for facilities owned by PRC entities will face a “presumption of denial,” and facilities owned by multinationals will be decided on a case-by-case basis.
Thresholds are as follows:
Logic chips with non-planar transistor architectures (i.e., FinFET or GAAFET) of 16nm or 14nm, or below; DRAM memory chips of 18nm half-pitch or less; NAND flash memory chips with 128 layers or more.
Restricts the ability of US persons to support the development, or production, of ICs at certain China-located semiconductor fabrication “facilities” without a license;
Adds new license requirements to export items to develop or produce semiconductor manufacturing equipment and related items; and
Establishes a Temporary General License (TGL) to minimize the short-term impact on the semiconductor supply chain by allowing specific, limited manufacturing activities related to items destined for use outside the PRC. The rule is effective in phases after being filed for Public Inspection with the Federal Register.
“This is the US salvo against China’s efforts to build its domestic tech capabilities,” said Patel, who estimates the restrictions could reduce global technology and industry trade by hundreds of billions of dollars. “It’s the US firing back, making clear they will fight back.”
”The U.S. president has committed to rapid decoupling, whatever the consequences.”
Fed Rate Hikes continued:
The meeting concluded with the FOMC approving >its third consecutive 0.75 percentage point increase, >taking benchmark rates to a range of 3%-3.25%.
Markets widely expect a similar-size rise to be >approved at the next meeting in early November.
Officials did note that they see a point coming when >the pace of rate hikes at least will decelerate, >though they did not put a time frame on when that >will happen.
The minutes said FOMC members noted it “would become appropriate at some point to slow the pace of policy rate increases while assessing the effects of cumulative policy adjustments on economic activity and inflation.”
They said that time would come after the fed funds rate had “reached a sufficiently restrictive level,” after which “it likely would be appropriate to maintain that level for some time until there was compelling evidence that inflation was on course to return to the 2 percent objective.”
The summary of economic projections at the meeting pointed to a “terminal rate,” or end point of rate increases to be around 4.6%. Markets expect the Fed to hike into early 2023 then keep rates there through the year.
“These new controls [are] a genuine landmark in US-China relations,” Gregory Allen of the Center for Strategic and International Studies wrote in a recent analysis of the new rules. “These actions demonstrate an unprecedented degree of US government intervention to begin a new US policy of actively strangling large segments of the Chinese technology industry—strangling with an intent to kill.”
“What we want is certainly a decoupling: certainly from China, and I would say other regimes in the world which don’t share the same values,” he told a panel hosted by the Canadian American Business Council.
“People want to trade with people who, really, share the same values.”
Former US president Donald Trump imposed a 25 per cent tariff on Chinese-made network servers, modems, routers, wireless headphones and smartwatches in 2018 when he fired the first salvoes in the trade battle.
Since then, US imports from China of IT hardware and consumer electronics have slumped 62 per cent, whereas imports from the rest of the world are 60 per cent higher, the Peterson Institute for International Economics (PIIE) said in the study, published on Thursday.
China’s share of US imports for these products has been cut by nearly two-thirds, from 38 to 13 per cent in four years, according to the American think tank, with Mexico and Taiwan now “sizeable” foreign suppliers.
China accounted for 47 per cent of US chip imports by volume before July 2018, but its share fell to 39 per cent immediately after the tariffs were imposed, PIIE said.
China tightening its grip on factories and exports by using Zero Covid as a Trade War weapon against the West. (Meanwhile Chinese media still whines and begs the US to drop the tariffs)
US to send 6 or more Nuclear Capable B-52‘s to Australia, sending strong message to China
China locks down area around iPhone factory in blow to Apple.
China continues, as they have from day 0, using Covid and the guise of “Covid containment” to exact damage to US and western businesses and economies in retaliation for the US-China Trade War
Long overdue for decoupling, China also warns the West “be careful what you wish for”.
What everyone should be looking for is meaningful measures of De-escalation from Beijing. This is critical. Up to now we have seen major escalation, and this is worrying US generals that War with China is coming with no possibility of preventing it.
All hands on deck - Germany blocks chip factory sale to China. The Allied Nations are showing alignment.
Taiwan is a big red line
Apple will take years to diversify from China factories — yeah no kidding, because like every other big company they have been procrastinating or even trying to avoid leaving China. It’s time for companies to grow spines and hurry up.
Chinese exports to the US were down by 12.6 per cent year on year to US$47 billion in October, compounding the 11.6 per cent fall in September
Top Chinese exports to the US – such as mobile phones, clothing, toys and furniture – all declined last month
“The aim is to change the incentive structure for German companies with market economy instruments so that reducing export dependency is more attractive,” the document said, singling out the chemicals and vehicle industries.
Foreign demand on Chinese exports is dropping whether by choice or by sanctions, and China continues countering with a forced drop in production via “covid containment” theatrics and artificial labor shortages. A dangerous game since Zero-Covid has placed too much burden on the Chinese people. China state media continues to beg the US daily for dropping the China Tariffs which the western media alleges are a “failure”.
Has Xi Jinping painted himself into a corner? It’s unclear to what extent he is willing to go — the total ruin of China?
The game of limbo continues between China and the West to see who can go lower without breaking.
Chinese people will be robbed by the CCP of yet another Chinese New Year holiday.
As mentioned before - china artificially reduces supplies for export, so US along with Fed rate hikes operating as force multipliers is working to reduce demand.
As above, US strategy is appearing in latest numbers — but with China pivoting away from Economic priorities, it will be interesting to see how China adapts. Will China simply convert the low demand factories into Military Produciton Lines? Some say this is already taking place…
Meanwhile Apple waiting until the last possible moment to accelerate efforts to move operations out of China. This follows an embarrassing moment when Tim Cook stayed silent when questioned about the protests and brutal Chinese crackdown over the past week - set over a backdrop in which Apple revealed they disabled Airdrop in China to prevent protesters from using the tool.
Zero-Covid policy is about Trade, not the virus.