Wow. China’s high-tech economy just took a major boot to the knackers…


A recent move by the Biden administration has really put the boot into China’s high-tech industries.  In a series of tweets, Jordan Schneider sums up the situation.  Here’s part of Threadreader’s condensed version.

The US government’s new export controls are wreaking havoc on China’s chip industry.

New rules around “US persons” are driving an “industry-wide decapitation.” 

The following is the translation of a thread posted earlier this week by @lidangzzz.

“Lots of people don’t know what happened yesterday.

To put it simply, Biden has forced all Americans working in China to pick between quitting their jobs and losing American citizenship. 

Every American executive and engineer working in China’s semiconductor manufacturing industry resigned yesterday, paralyzing Chinese manufacturing overnight.

One round of sanctions from Biden did more damage than all four years of performative sanctioning under Trump. 

Although American semiconductor exporters had to apply for licenses during the Trump years, licenses were approved within a month. 

With the new Biden sanctions, all American suppliers of IP blocks, components, and services departed overnight —— thus cutting off all service [to China]. 

Long story short, every advanced node semiconductor company is currently facing comprehensive supply cut-off, resignations from all American staff, and immediate operations paralysis. 

This is what annihilation looks like: China’s semiconductor manufacturing industry was reduced to zero overnight. Complete collapse. No chance of survival. 

There’s more at the link.

I have three immediate reactions to this news:

  1. China cannot let this stand.  Premier Xi dare not allow his country’s high-tech industries to be stranded like this.  He must and will retaliate, so hard that (he hopes) he can force the USA to back down.  That may include measures such as invading Taiwan, to get his hands on that island nation’s high-tech chip foundries and expertise.  This may be the event that triggers such an invasion.  It’s that serious.  (Yes, Taiwan is doubtless prepared to destroy its chip foundries if China invades;  but if Xi is persuaded that his own special forces can carry out a lightning strike to take over the foundries before they can be destroyed . . . oh, boy.)
  2. Frankly, I don’t know how the Biden administration managed to stiffen its sinews enough to do this.  We all know that the Biden family is in the pockets of Chinese financiers and politicians – there’s been so much evidence of that in recent years that it’s beyond dispute.  The same can be said for many US politicians, on both sides of the aisle.  That being the case, why/how have US politicians taken a decision that so drastically impacts their paymasters?  I’d love to know.
  3. Every country in the world that has a high-technology economic sector – including Europe – must now weigh up the risk that a unilateral decision by another country (the USA, of course, but also conceivably other high-tech nations) may completely disrupt (a) vital part(s) of its economy without warning.  That may have profound implications for future government funding and industry focus in the biggest economies in the world.

Peter Zeihan sums up China’s dilemma like this:

I suspect things are going to get very “interesting” (in the sense of the fabled Chinese curse), very quickly . . .



  1. How many Chinese immigrants on visas are there in corporate America right now? China can always retaliate the woke way, by claiming discrimination (there's a special anti-asian law now you will recall) and hate speach; plus the Cimate change/ESG slowdowns, plus some outright corporate sabotage. Actual military action can come later.

  2. "To put it simply, Biden has forced all Americans working in China to pick between quitting their jobs and losing American citizenship."

    Wait, what? Since when can the President revoke people's citizenship? Is there any legal basis for this whatsoever?

    If true as stated, this is incredibly dangerous. What next, force all Republicans to choose between changing parties and losing their citizenship?

    1. I am thinking that since a lot if those business are part owned by the CCP then they are de facto working for a foreign nation. Being in the employ of a foreign nation means they can.

      The CCP tries to grey out as much if that as they can.

      Part of me thinks this is all part of the "Great Reset"/"Build Back Better" BS. He'll, I 1/2 think all tye nuclear saber rattling is part of that (WWIII would be one hell of a reset). It is clear that China is not on-board with self immolation for the greater good like wester leaders are.

      Thus could also be the plan of some of the China hawk neocons or means if deflecting from Biden's corruption.

      It is also very possible that Biden or the WH proper isn't even aware that it happened.

  3. I wonder if it has to do with that CHIPS Act they were talking about (or passed?) a few weeks ago.

    After all, if you're onshoring your chip manufacturing, and Congress wants to protect its investments, there's no reason for them not to decapitate what is now the competition.

    Either that, or they though they were doing something else entirely, and they didn't think of the effect it would have on the Chinese operations.

  4. 1) Even if Taiwan is able to destroy its chip making factories before China could take control, that would likely hurt the US more than China in the long run.
    2) Chances are this came from the state department, not the white house. So, we may see the white house do a reversal of it when China protests it.

  5. I’ve turned off Ziehan, because the man is a broken record.
    “America is inevitably going to collapse.
    “China is inevitably going to collapse.
    “Europe is inevitably going to collapse.
    “Russia is inevitably going to collapse.

    If I was Taiwan and wanted to ensure that my chip-foundaries did not fall into Chinese hands, I would ensure that had the capacity to destroy them from a distance. Sneaking some commandos into a factory and trying to hold it until the invasion front reaches them is one thing. Sneaking an effective GBAD in there is quite another. You don’t fit those in carry-on luggage.

    The capability exists to make a successful invasion of Taiwan impossibly expensive, if the Taiwanese government is prepared to spend the $$ and do the work. To put it simply, Taiwan is a very large, unsinkable weapons platform, with the ability to hide and/or bury its defence systems in a way that China cannot match. It is far harder to detect and destroy a missile launcher in a camouflaged bunker, than a ship on the surface of the ocean. The same goes for Port facilities. As soon as the Chinese commence hostile action, that legitimises long-range bombardment of their assembly areas. Troop-transports and landing-ships are big, soft targets.

    The fact that both sides have missile-defence capabilities complicates things, but technology in war has always had these complications. One of the things that have come out of the Ukraine conflict is traditional concepts of air-superiority no longer hold. Neither side has managed effective SEAD.

  6. Interesting… Since we just got briefings from the FBI on "foreign involvement" in higher education research (I work at a University), and coming from a place with a LOT of Faculty/Students from China… Going to be interesting… Not good, just not boring I guess…

  7. Interesting question…

    To what degree does China depend on imported tech for its high-end military hardware?

    It’s an important question, because building up to an invasion of Taiwan requires building a lot more weapons of the long-range-precision and SEAD type. The actual invasion has the potential to severely deplete stocks (another lesson from Ukraine) and even if the manufacturing capacity was captured completely intact, it is going to take years to rebuild those stocks….. which would leave China more weakened than the CCP would be comfortable with.

    I’m keeping in mind tgat the Chinese systems are closer to Russian technology than they are to ours.

    So….. situation is fluid and the response may not be what we think. China may decide that it’s best option is to “play nice” for the next ten years while they research and build their own tech-manufacturing capacity. Culturally, they take the long view. It appears to be Xi who wants to push progress in the shorter term to create a personal legacy.

    Or maybe they create another flu-bug. They’ve just seen how easily we can be persuaded to commit economic and cultural suicide …..

  8. I don't believe it for a second.

    Even the dummies in Congress and State Department know just exactly how our involvement in WW II came about. It followed as naturally as balls rolling downhill when the United States F$CKED over Japan's entire economy by cutting its access to the resources required by an industrial economy. The same would follow if done to China or any other State. Japan really had no options other than to TAKE what it could no longer get on the market.

  9. @ HMS Defiant:

    "China's chip fabs are borked!" does require that no Chinese person working there ever learned anything from their American counterparts, though.

    They still have the factories, they still have the people who were doing the fabbing, presumably they still have the designs.

    So it's not actually the same as US depriving Japan of oil that they couldn't get from their own territory.

  10. Why now? Well, in Red China, West Taiwan, the economy is tanking fast and tanking faster every day. Real estate? Gone. Building boom? GOOONNNEEEE. People's life savings? Gone in a blink. Red China is now broker than the USSR when it finally fell.

    So SloJo and the Ho (really, their handlers) see the huge amount of graft and grift coming from Communist China as ending, and ending sooner than anyone thinks.

    Why not say, after they've slit their own throats, that we are enacting the very sanctions that Trump put in place, except doubling down on everything?

  11. As pointed out, they still have the factories, the tools, the people and the designs and they have graduated thousands of engineers from our best universities with PhDs and a level of skill not readily obtainable elsewhere. I think this is slit our own throat level policy and national security decision-making but have come to expect that from this administration, democratic politicians, globalists, and our elites. That chip making facility that Taiwan et al are going to build here? That's still 3 full years away from production.
    On Beans' comment, we used to have a saying about the norks, those of us in the business who spent a lot of time on that Peninsula used to say that the Kim in charge would use it all before he lost it all and not to expect nork to go quiet into the night the way the Soviet Union collapsed. Kim has nothing to lose by firing them all off once he gets the range on his missiles.

  12. @HMS Defiant.

    It may have escaped your notice, but WW2 kicked off when the Wehrmacht rolled into Poland.
    America was involved from the moment that the Axis – of which Japan was a part, you may be surprised to learn – decided that America could not be permitted to trade with one of its largest trading partners. Were you going to let that stand?
    Next you tell us that America *must* trade with angry imperialists if the want what you have to sell, regardless of what they had done in China.

    Did you really expect America to lie down?

  13. "Did you really expect America to lie down?" Peter W

    Every one of the current administration's actions have substantially hurt the US middle class. The Russian sanctions pushed prices up here and continue to do so. The restrictions on chips, chip manufacturing equipment and such will cause extreme problems in the US and force China to copy what they already have.

    Consider how many everyday machines that we use must have chips. Our vehicles, microwaves, stoves, computers, phones, manufacturing machinery of all types just to point out a few. As Defiant pointed out, relief for manufacturing more chips in the US is years away.

    Read and see how many Chinese professors and students are taking knowledge and trade secrets away. Don't forget to read about all the military and civilian contractors selling the best information to China. These restrictions are going to hurt us more than China.

  14. Eric, yes. Pretty sure the President doesn't have that power.

    Other items in the blurb that I'm skeptical about, "all Americans working in China". A friend teaches at a private high school in Huangzho. Haven't heard him mention this, so maybe not "all".

    As far as "cutting our own throat because chip manufacturing in the US is years away", isn't this always the argument. But it's always years away cause no one ever does anything. Maybe now someone will actually open a factory or three. Case in point, Keystone Pipeline. "How will that help, it's years away", and yet it would have opened next year, 2023.

  15. Looking at the overnight financial market data out of the Far East… I'm entertaining doubts about the veracity of the overall story. (Hm. Apparently the news, such as it was, was from about a week ago, so maybe I'm looking at the wrong place in the timeline, but there's also been time for consequences, and the story, to propagate.)
    Are there any reliable sources for what actually happened? Major change in U.S. policy, or just a rumor derived from activities at a couple of companies?

  16. @Eric Wilner,

    Who can travel or reside overseas is entirely within the purview of the Executive branch of government, under the Department of State.
    Currently, the period one can remain overseas without "tagging up" is 10 years, but the State Department can change that period on any whim they desire, for one country, or all of them.

    China got pwned with this, and you should go back and punch your civics teacher for not clarifying it for you back in the day.

    If your argument is that Emperor Poopypants was never elected, and thus illegitimately wielding executive control, ROWYBS.
    If you're just whinging because someone pretending to be the president is actually wielding official authority, you get half-credit.
    If you didn't know the actual president is the decider on this, both by custom and black-letter law, brush up a tad.

  17. "Natural-born U.S. citizens may not have their citizenship revoked against their will, since birthright citizenship is guaranteed by the 14th Amendment to the Constitution, but they may choose to renounce their citizenship on their own."

    Find the law website.

  18. " don't know how the Biden administration managed to stiffen its sinews enough to do this"

    Perhaps the wire transfers did not go through or Jill didn't get her bite os the pie.

  19. Peter,
    For US, World War II began on 7 December 1941 and a State of War existed between the US and Japan effective 8 December when Congress declared War. You may note from the historical record that US did NOT declare war on Germany until Germany declared war on US on 11 December 1941.
    It doubtless escaped your attention that when the German Army invaded Poland, so did the Soviet Army. We were still refining the definition of a world at war until the Japanese attacked the United States. Right up until that moment the war in Europe was just another one of those stupid things Europeans do to themselves for the pure hell and sport of it. You know, like the collapse of Yugoslavia and the current unpleasantness in Ukraine and Russia.
    And yeah, Japan attacked the US because they saw US throttling their trade and industry. Kind of like we're taming the Russians and the Chinese. Do you not see the similarities?

  20. The US can charge those people with a crime, but removing their US citizenship won't fly, constitutionally. This will go away quickly, but it will look staunch as hell for the mid-terms. Right now, Joe B lives for the mid-terms.

  21. PeterW:

    FDR cut off oil sales to Japan (and scrap metal). Japan had an 18 month store of oil to run their country. Our military told that idiot that he was going to force Japan to go to war, as we were the only source of oil available to them (not sure why no one else would sell them oil). FDR was pissed that Japan was fighting with China, and thus interfering with our Chinese market. He expected that the Japanese would fold up their campaign and meekly return to the status quo (bwahahah). Japan decided to go for broke instead.

    BTW, documents turned up in the EU a few years ago that showed that FDR had promised various countries in Europe to help if Hitler crossed their borders. That stiffened their spine, and they decided to fight, even though none of them were really capable of stopping him militarily. Unlike the Euro leaders, FDR did not have the legal ability to back up that promise, but they thought he did. One could realistically say that FDR was the major cause of WW2 going hot.

  22. Nobody would sell Japan oil because the US under FDR enacted sanctions against them after the invasion of China. Then, later, FDR halted all US oil sales.

    Japan was just reacting to being strangled by FDR.

    Other issues like treated Japan as a red-headed step-child were also part of the reason.

    But, yes, that chowderhead FDR and his State Department were heavily involved in prodding Japan into war.

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