So I guess we are in a new cold war.
The leaders of both parties have become Chinese hawks.
There are rumors of war Taiwan.
Xi Jinping promises to dominate the century.
I can’t help but wonder:
What will this cold war be like?
Will it transform American society as the previous one did?
The first thing I notice in this cold war is that the arms race and the economic race are merging together.
Until now, one of the main targets of the conflict has been microchips, the tiny gadgets that not only power your car and phone, but also drive missiles and are needed to train AI systems.
Whoever dominates chip manufacturing will dominate the market and the battlefield.
Secondly, geopolitics is different.
As Chris Miller points out in his book “Chip War,” the microchip industry is dominated by a few very successful companies.
Over 90% of the most advanced chips are made by a Taiwanese company.
A Dutch company makes all the lithography machines needed to build cutting-edge chips.
Two companies in Santa Clara, California monopolize the design of graphics processing units, critical for running AI applications in data centers.
These choke points represent an intolerable situation for China.
If the West can block China’s access to cutting-edge technology, then it can block China.
So China’s intention is to get close to the chip self-sufficiency.
The intention of the United States is to be more self-sufficient than now and create a global chip alliance that excludes China.
American foreign policy has rapidly reorganized in this direction.
During the last two administrations, the United States has moved aggressively to prevent China from getting the software technology and equipment it needs to build the most advanced chips.
The Biden administration is shutting down not just Chinese military companies, but all Chinese companies.
It sounds like a common sense safeguard, but put another way, it’s dramatic:
Official US policy is to make a nation of nearly 1.5 billion people poorer.
It amazes me even more how the new cold war is reshaping domestic politics.
There have always been Americans, ever since Alexander Hamilton’s Report on Manufacturing Industry in 1791, who have supported industrial policy, that is, using government to strengthen private economic sectors.
But this approach to governance has generally been marginal.
It is now at the center of American politics, both when it comes to green tech and chips.
Last year, Congress passed the CHIP Act, with $52 billion in grants, tax credits and other subsidies to encourage chip manufacturing in the United States.
It’s an industrial policy that would have Hamilton gaping and applauding.
Over the next few years and decades, China will invest huge amounts of money in its industrial policy programs, in a whole range of cutting-edge technologies.
An analyst at the Center for Strategic and International Studies estimates that China is already spending more than 12 times more of its gross domestic product in industrial programs relative to the United States.
Over the next few years, US leaders will need to figure out how effective such spending is and how to respond. Even more than the last Cold War, this one will be fought by the technological elites.
Both sides are likely to spend a lot of money on their better educated citizens, a dangerous situation at a time of populist grievances.
You can already start to see a new set of political cracks.
At its core are the neo-Hamiltonians who supported CHIPs, including the Biden administration and the 17 non-Trumpy Republicans who voted with Democrats for the bill in the Senate.
On the right, there are already a number of populists who are very hawkish of China when it comes to military issues, but they don’t believe in industrial policy.
Why spend all that money on the elites?
What makes you think the government is smarter than the market?
On the left are those who want to use industrial policy to serve progressive goals.
The Biden administration has issued a staggering number of diktats for businesses receiving aid from the CHIPs Act.
These diktats would force corporations to behave in ways that serve a number of progressive and alien priorities: child care policy, increased unionization, environmental goals, racial justice, and so on.
Instead of being a show all about pushing fries, it aims to be all at once.
One would expect that as the Cold War environment intensifies, our politics will become more serious.
When Americans went to the polls during the last Cold War, they realized that their vote could be a matter of life and death.
It could be like this again.
Ruling during this era will require extraordinary levels of seasoned statesmanship:
execute industrial programs that do not bloat, partially deglobalize the economy without triggering trade wars, consistently outrun China without humiliating it.
If China realizes that it is losing more and more ground every year, the Taiwanese invasion it may be more forthcoming.
Miller was asked what the likelihood was that in the next five years a dangerous military confrontation between the United States and China produced an economic crisis equivalent to the Great Depression.
He estimated them at 20%.
Seems tall enough to focus the mind.
c.2023 The New York Times Society
Source: Clarin
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.