Will the US' AI Trade Restrictions Actually Hurt China or Just Force It to Accelerate Faster?

The U.S. export tech trade restrictions against China are expected to have significant implications on the Asian country’s technological development.

Rather than deter progress, these restrictions may spur China to focus on developing even better cutting-edge artificial intelligence (AI) innovations in the coming years.

According to technology experts, China’s new self-reliance on tech will accelerate the creation of advanced artificial intelligence (AI) tools and military components that will edge over the U.S.

China Could Surpass the US as the World’s AI Leader

On March 2021, the National Security Commission on Artificial Intelligence released a warning report that detailed China as a burgeoning tech country powered by some United States software companies.

As detailed in the 756-page report, China is already a fast-paced artificial intelligence (AI) peer, with a spate of technical advancement in several applications.

It was also predicted that the Asian country would overthrow the U.S. as the industry-leading powerhouse of technology and AI innovations in the next decade.

A group of experts, including former Google Chief Executive Eric Schmidt and Robert Work, the former United States Deputy Secretary of Defense, were lead authors of the report.

These experts suggested that the U.S. had become complacent and needed a quick rebound to mitigate China’s speedy growth.

The release of this AI report came just two months after President Joe Biden’s inauguration on January 20, 2021.

China Could Surpass the US as the World’s AI Leader

This is due to concerns that emerging technology startups based in the U.S. were helping China narrow the gap with the military through significant tech innovations, including AI tools and algorithms.

The Commission stated that while the United States worries about the rising number of Chinese aircraft, scholarships, missiles, and versatile satellites, it has to focus on what strengthens them.

The public report indicated China was gaining technologies such as software chips from the U.S. tech trade market to power up rapid advances in AI and quantum computing.

The Asian country was also alleged to have developed AI algorithms capable of breaching the U.S. spy agency encryption.

This led the Biden administration to announce new export controls on technology tools such as AI products, software chips, and semiconductors technologies to China on October 7, 2022.

However, this ban could haunt the United States in the coming years if strategies are not implemented to tone down China’s growing technology industry.

US’ Ban to Catalyze China AI and Tech Innovations for Military Superhorse

The U.S. Commerce Department’s recent imposition of extensive restrictions on the export of high-tech equipment and semiconductor chips to China set off a geopolitical quake.

It was considered one of the most significant and strategic policies undertaken by the Biden administration to counter China’s technological advancements and military capabilities.

U.S. Center for Strategic & International Studies (CSIS) cited the trade restriction to the Chinese tech sector as a “strangling with an intent to kill” approach.

Beijing, the capital of China, has long aimed for dominance across industry-leading technologies, positioning itself to compete with cutting-edge tech leaders in various high-tech components.

However, the United States currently holds an advantage over China in terms of semiconductor production, such as software chips.

A South China Morning Post report revealed that China heavily relies on foreign software chips. As a result, it allocates a considerable budget to importing this software than oil.

Nonetheless, experts remain optimistic that the country will eventually close this gap and build its own. If the US continues to deny China its superior technology, it might simply force China to speed up its chip sector, making it self-reliant much faster than it would otherwise.

In 2021, Total Telecom, an analysis provider based in the United Kingdom, predicted China’s bounce back.

On June 3, 2021, the firm published a press release via BusinessWire, revealing that Beijing has acquired competency in 28-nanometer and 14-nanometer chip manufacturing.

The demand for the 28-nanometer chips is estimated to triple by 2030, creating a staggering market value of $28.1 billion in revenue.

Meanwhile, in a recent report by the U.S. Center for Strategic & International Studies (CSIS), China is set to wage a microchip tech war that will undoubtedly trigger its AI advancement and military power.

If the country establishes a dominant position in legacy software chips headed by its 28-nanometer chips, it could give it coercive power in key market sectors such as automotive chips.


Additionally, the U.S. concerns about AI and military advancement by China may be a reality.

This is because the country is also making strides in developing self-built hypersonic weapons, which have traditionally relied on chips owned by U.S. software companies.

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