For two years, the USA has been trying to stop China’s technological progress with far-reaching measures. Antonia Hmaidi from the Merics think tank takes stock.
The Kirin 9000s chip makes the Chinese tech company Huawei’s smartphones 5G-capable despite US measures.
James Park / Bloomberg
If the USA has its way, China should remain technologically in the past. This is the goal of the extensive export controls that the Biden administration has been enforcing against China for two years. It wants to freeze China’s technological progress or at least significantly slow it down and make it more expensive. And above all, the Chinese military should not benefit from American high technology.
The USA and its allies justify the export controls by wanting to use the time gained to rebuild critical industries and to defend and expand their technological lead over China.
But does it actually work? Antonia Hmaidi is a senior analyst at the Berlin think tank Merics. There she deals, among other things, with China’s quest for technological independence. According to their assessments, there are some areas in which the American measures are causing problems.
Ms. Hmaidi, have the Americans managed to slow down the technological progress of the Chinese in the past two years?
Two years is a short period of time in terms of computer chip technology. In this area we are now seeing the consequences of measures that the USA took more than two years ago.
Which measures are you referring to?
The USA decided in 2018 that China should not have access to the most modern machines for chip production. Accordingly, Chinese companies such as the technology company Huawei and the chip manufacturer SMIC began to adapt back then. Despite US export controls, SMIC today produces chips with a transistor size of 7 nanometers, which actually require the most modern machines. Instead, SMIC repeats certain production steps several times using older machines in order to still produce modern chips. The chips are used in Huawei’s 5G smartphones, for example.
So are the US measures ineffective?
No, you can definitely see an effect of the measures. China’s 7-nanometer chips are more expensive due to longer production times and higher waste. And China does not seem to have yet succeeded in the next step, the production of 5-nanometer chips. In this respect, US measures have already slowed Chinese progress. But the Americans cannot completely freeze Chinese developments. But the measures have slowed the pace and made progress more expensive. Nevertheless, the Chinese have learned to live with the controls to a certain extent and have been forced to develop alternatives or temporary solutions.
Antonia Hmaidi, Senior Analyst.
Marco Urban
What do you mean?
Chips affected by export controls still make their way to China, albeit via a detour. In some cases, people simply use cloud services from Amazon, i.e. renting data centers abroad instead of setting up their own. And finally, they started using alternative Chinese products. For example, Huawei has developed its own chip for AI applications. This is worse than the most modern chips from the American manufacturer Nvidia. But it’s still better than the chips that Chinese companies can legally buy in the West.
For China, technologies such as computer chips are inextricably linked to national security. How do you get information like that about Huawei’s AI chip?
In the past, there has been a lot of proud reporting on technological innovations. That changed when individual publications led to American measures. The chip manufacturer SMIC made public around 2020 that it had achieved a technological breakthrough. A little later, the US Department of Commerce took action against SMIC. Since then, American companies have needed a special license to work with SMIC. Today, research is much more complex and complicated.
How do you go about this?
For example, I can get an idea from company announcements, research publications or patent applications. Companies still have an interest in providing information about technological advances, even if they now increasingly only do so in Chinese. But these announcements are sometimes exaggerated.
What does research look like?
A lot is still published because funding programs evaluate research institutes based on their publications, among other things. Institutes therefore have to make their research public in order to receive money. Some papers are intentionally no longer submitted to English-language journals. But you can still see them in Chinese journals.
How do patent applications provide valuable information?
It regularly happens that patents are kept secret because the Chinese government considers them too important and valuable for national security. And yet a lot of patents are still published, even for critical technologies such as computer chips. Last year, for example, Huawei filed a patent for modern lithography technology that is needed to produce chips. I sometimes ask myself the question: Does China actually want the USA to notice this?
According to your research, where are the US measures causing the most problems for China?
China’s biggest problem is the equipment needed to make computer chips. Different machines are needed for each of the numerous production steps. And at every step, China is still extremely dependent on equipment affected by the American measures. In Chinese factories, the proportion of domestic machines in all production steps is less than 20 percent. This shows why the Americans have focused on chip manufacturing machines.
Where else does China have problems?
Generative artificial intelligence (AI) such as language models is also a big topic. The most modern chips, called GPUs, which are usually used for this purpose, are not allowed to be delivered to China.
What can China do about it?
China is trying to collect the country’s existing GPUs in one place so that they can essentially form a data center and be used there permanently. And then it is decided which Chinese company gets how much access to the computing power. This in turn leads to China sometimes setting different priorities than Western countries.
For example?
Chinese AI models are based on smaller data sets and are less difficult to train. This in turn means that they are only suitable for specific purposes. For example, a model can help a worker maintain a machine. However, the same model can hardly be used for other purposes. Chinese models are worse than those from Open AI, Meta or Alphabet, which are often characterized by their versatility.
What influence do American chip controls have on developments in the Chinese military?
Assessing this is much more difficult. But the longer the American measures last, the more often they will also affect standard technologies. One consequence of technological advances is that the chips in conventional laptops will eventually be as powerful as the AI chips that the US now withholds from China. If such high-performance chips are used more and more widely in the West, while China does not get them or cannot produce them itself, then this will become more and more of a problem for China.
And what consequences would that have in the military sector?
Better chips could make a difference in the area of drones, for example. The calculations for controlling a drone are currently carried out on the ground and then sent to the drone. As long as this is the case, you can theoretically neutralize the drone by breaking contact between the ground and the drone. If the drone were equipped with sufficiently powerful chips, it could carry out the calculations itself. Then it would be much more difficult to turn off. This means: There are many scenarios where today’s US measures could lead to a change in the future. But today, in my opinion, they don’t have much influence.
You said at the beginning that after two years it was difficult to assess the effect of the American measures on China. What about the goal of the United States and the West to strengthen their own technological capabilities?
This goal is so broad, affects so many different technologies. It is impossible to say when it will be achieved.
