As a result of the spy balloon incident, it’s increasingly clear that the Biden Administration is going to rachet up its efforts to choke off the supply of advanced American technologies to China, as per this article in today’s New York Times. One lawyer is quoted as saying: “Industry is kind of united. We don’t want this.”
The reason, as I first documented in this cover story in 1990, is that American CEOs in particular bought into the concepts of “statelessness” and “globalization.” I found that German CEOs realized they have some obligations to the German state and Japanese CEOs knew they had to maintain relations with MITI, but American CEOs truly drank the Kool-Aid. It didn’t help that Milton Friedman told them their only obligation as CEOs was to maximize their share price each quarter. Entire generations of American CEOs have operated on the basis of these principles.
So today, even as signs of China’s global technological ambitions are becoming crystal clear, American CEOs are relucant to curb their investments in China’s Artificial Intelligence and semiconductor industries. This way lies madness. The Center for Security and Emerging Technology at Georgetown has even documented how one company, Applied Materials, seems to be preparing to serve the needs of China’s semiconductor industry from Singapore. It wants to sell semiconductor manufacturing equipment without any American content from an offshore base into the Chinese market.
This is an incredibly sensitive and difficult conversation to be having. But the Biden Administration is going to have to confront it head-on. Whether it is done in public or privately, it is a conversation that must start now.
