US heavy artillery against China’s dictator

Good morning, dear reader,

Let’s start the day in a completely different way than usual. First of all with a coffee, of course. But then with a good portion Crisps.

At least that’s how the day begins when you live far away in the east: In China chips play an enormous role – but not those made from potatoes, but computer chips made of silicon. The huge empire spends more money on imports of semiconductors than on oil. The more powerful the microprocessors are, the greater the dependency. president Xi Jinping gets very nervous when he thinks about it and pumps untold billions into building a domestic industry. But he hasn’t had any success with it so far. And this now has serious consequences.

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The beginning of October, while the world was distracted and looking at the preparations for the pompous party congress in Beijing, the American Office of Industry and Safety published a technocratic set of rules. The document has it all. In a nutshell: the Americans are cutting off China’s access to top-class chip technology. Top technology from the USA? There is no longer. Advice or service from US specialists? Forbidden. Supply of material with which China could overcome its technological lag? End of story, nothing to add.

The big end doesn’t come right away. With special permits, the US authorities can temporarily dose the pain more precisely and protect their own industry from the cold withdrawal of Chinese money. Nevertheless: Because American technology is now found in almost all semiconductor products, it is now becoming very difficult for China to get the coveted hardware that is needed for Artificial intelligence, supercomputer and trend-setting research is essential.

The direction is clear: Xi Jinping’s authoritarian state is to be blocked from the future. Like Donald Trump’s chaos squad before it, Joe Biden’s government has taken a hard line against China and has repeatedly imposed sanctions. So far, these have been limited – now the heavy artillery is being rolled out. There is one in Washington directional decision fallen, and we can assume that the Joe will soon extend the hi-tech blockade to other business areas.

Does Xi Jinping hit back? Although he has only just been hailed as the new emperor, he does not cover himself in glory with his decisions: China’s economy is stuttering because the constant corona lockdowns are taking their toll. Mr. Xi doesn’t need a trade war at all. His regime will therefore probably not pay back in kind for the attack immediately. But revenge is only a matter of time.

The consequences could be serious. The fact that China is so dependent on semiconductor imports was previously considered life insurance for the small Taiwan next door. The ruler in Beijing would be only too happy to incorporate the democratic island state, but annoyingly the majority of the computer chips that his empire so urgently needs are manufactured there – which is why Taiwan must not be engulfed in fire and war. However, fewer and fewer of the coveted chips are now being sold to China, which could lower the inhibition threshold for an invasion.

The US government has just warned of an imminent Chinese attack, reports our Washington correspondent Bastian Brauns. Industry captains will hear practical preparation tips for this scenario, and at this point at the latest we should also in Germany prick up your ears: The director of the US cyber security agency is advising the heads of large corporations to specifically focus on one dangerous crisis set.

What follows? Broadening supply chains, organizing alternatives to Chinese products: This is actually nothing new since the bottlenecks during the Covid pandemic – but still far too little has happened. It is not enough for a company to check its direct suppliers. What’s the point if the business partner produces in Italy, but in whose turbines a special part is only available in China?

Is the? Probably yes – at least with a little pressure. I’ll give you an example: thanks to the supply chain law, the cheap clothes we wear are now subjected to a meticulous inspection: no child labor is allowed in them and no cotton picked by Uyghur forced laborers in Xinjiang, China. Conditions, pressure from human rights organizations and one or two shitstorms have ensured that manufacturers can no longer excuse themselves by saying that they unfortunately hardly know anything about the origin of their goods.

What works when it comes to enforcing elementary human rights can also work elsewhere. Total isolation from China is not a realistic goal, but minimizing risk is. Medium-sized German companies can also import their special screws from China in the future, if it is good and cheap. But no longer without an alternative: A second supplier who manufactures the same part elsewhere should also urgently be included in the portfolio. Because if there is a real bang in the Taiwan Strait, the stove in the German economy will go out very quickly. Will the Chancellor consider this when he flies to the Emperor in Beijing next week?

China comes, Hamburg kisses

Hamburg's container terminal in Tollerort is one of Germany's most important trading windows.
Hamburg’s container terminal in Tollerort is one of Germany’s most important trading windows. (Source: Georg Wendt/dpa-pictures)

It seems that the problem with China has not yet been properly understood in this country: The traffic light parties want it for the Chinese state-owned company cosco apparently actually allow themselves im Port of Hamburg to shop Instead of the previously planned 35 percent, Cosco should “only” have 24.9 percent at the container terminal Nice place may take over. “A partial ban is an emergency solution that limits the damage,” government circles said last night.

They added meekly: “It is still the case that, from our point of view, a complete ban would have been the right step to protect our infrastructure.” But with that we could Robert Habeck, Annalena Baerbock and other federal ministers not against the ex-mayor of Hamburg Olaf Scholz prevail, for whom the port economy is more important than independence.

And what happens if the Chinese do indeed mimic Putin and attack Taiwan? Then people in Germany are completely surprised again, stuff hundreds of billions into aid programs and suffer the consequences.

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