The Rise of China: Set to Become the World’s Largest Economy

The Star has reported that the United States has imposed limitations on the export of critical semiconductor components and technology to China, placing “unprecedented” pressure on China’s bid to surpass the US as the world’s leading economy. Despite having a robust industrial manufacturing capability, China’s core technologies, such as semiconductors, are vulnerable to Washington’s strategy of technology containment. Chinese President Xi Jinping’s ambition to transform China into the foremost global digital power and the world’s number one economy could be in jeopardy, according to The Star, as quoted by ANI.

According to Jun Zhang, an associate professor of economic geography at the University of Toronto, chips are the cornerstone of the modern economy, and the US’s sanctions will have a significant impact on China’s semiconductor advancements. Zhang estimated that one yuan worth of chips could support 10 yuan worth of electrical capacity and generate 100 yuan of economic output. China is facing unparalleled pressure from the US, and its international competitiveness hinges, to some extent, on the extent of American containment efforts.

Dan Wang, an analyst with Gavekal Dragonomics, said, “These sanctions will hobble China’s semiconductor advances.” To bolster American semiconductor development, US President Joe Biden signed the bipartisan Chips and Science Act of 2022 into law in August, providing federal subsidies worth USD 52.7 billion. The US administration also expanded its list of technological controls on China in October, focusing on advanced semiconductor chips, chip-making software, and tech talent.

Last month, the US joined hands with the Netherlands and Japan to limit the supply of cutting-edge chip-making equipment to China, accelerating containment efforts. Furthermore, the European Union (EU) is expected to pass the EU Chips Act this year, with the goal of doubling Europe’s share of global chip manufacturing capacity to approximately 20%.

Beijing has not provided an official estimate of potential economic losses, but it has accused Washington of misusing its market dominance.