Breakingviews - US-China tech war will hold Asian allies hostage

HONG KONG, Dec 16 (Reuters Breakingviews) - China will turn Washington’s technology weapons on its Asian neighbours in 2025. U.S. curbs on imports of semiconductors and other goods have hobbled advances in artificial intelligence in the world’s second-largest economy. The People’s Republic is starting to retaliate. Its leverage over corporate giants in Japan and South Korea makes them prime hostage targets.

In 2022, outgoing U.S. President Joe Biden introduced sweeping measures to block China’s access to cutting-edge chips and chipmaking technology. Since then, Washington has expanded the controls to cover a broader array of equipment and materials, including machines and tools made by Dutch giant ASML (ASML.AS), opens new tab and Japan’s Tokyo Electron (8035.T), opens new tab. In December, the Biden administration added more than 100 Chinese entities to its trade restriction list as part of its new package of controls.

The tightening restrictions have prompted Beijing to respond. In mid-2023, the government started requiring export licences for gallium, germanium, graphite and antimony – materials vital for making batteries, semiconductors, fibre optics and weapons. But a closer look at the trade flows did not show Chinese authorities systematically denied export licences, according to Cory Combs, a researcher from analysis firm Trivium China. That is about to change. In response to Washington’s latest controls, the Chinese government announced an outright ban on...
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