Of chips and the chip on US shoulders

By Frank Yang

The latest development in the tech world – and in China-U.S. relations – is the announcement by tech giant Nvidia on Monday that it has won the U.S. government's approval to sell H20 computer chips to China. This marks a policy reversal of the Donald Trump administration, which banned such sales to China in April.

The announcement was followed by Nvidia CEO Jensen Huang's visit to China, during which he told reporters that Nvidia would also sell a new chip, the RTX Pro GPU, to Chinese clients. These developments have made stock markets and businesses across the board react positively.

However, the reaction of some U.S. media is not so positive. Vox said, "Trump just handed China a major advantage on AI" and that "allowing H20 exports to China could shrink the U.S. lead on AI."

CNBC implied that China would be getting inferior goods, quoting U.S. Commerce Secretary Howard Lutnick as saying that "China is only getting Nvidia's '4th best' AI chip." It seems that it is always lose-lose for China for a section of the U.S. media, no matter what it does or is done to it. According to the New York Times (NYT), the ban was lifted due to vigorous lobbying by Huang. In April, the NYT had written that the ban has triggered concerns that "the Chinese tech giant will become a chip-making powerhouse."

Why does a section of the U.S. media always view China with bias? Why do some people regard the matter of selling chips as a fight-unto-death between China and the U.S. when China has always advocated cooperation over conflict? And why does the U.S. blow hot and cold when it comes to trade with China?

The root cause of all this is the obsolete mentality that still permeates U.S. society, especially some U.S. politicians. It is a combination of the Cold War mentality, the zero-sum game mentality, and the "China threat" mentality, fearing that doing business with China, especially in the technology sector, is bound to undermine U.S. interests and security.

But on the other hand, the U.S. also fears that if it cuts off all trade ties with China it will lose the highly lucrative Chinese market. And that's why the U.S. administration is blowing hot and cold over doing business with China.

In addition, there is a new logic or thinking in the U.S. – "playing the victim," that is, propagating the angle that the U.S. has long been "deceived" by other countries and has become a victim of international trade and globalization. This new logic is equally detrimental. It will give rise to trade protectionism, anti-globalization, anti-immigration, anti-cooperation, a blame game and xenophobia.

As political correctness controls the U.S., it has enabled politicians to put the political shackles on businesses who fear they will be cancelled if they do not demonstrate the "correct" political creed. But deep in their heart, American businesses know that doing business with China will benefit not only their companies, but also the American economy and the American people. Nvidia's annual report released in January showed that the Chinese market generated $17 billion for the company, accounting for 13 percent of its total revenue.

Huang has acknowledged that China is the company's "key market." He argued that closing off the China market will only hurt U.S. tech companies. It's simple economics. Whoever occupies a larger share of the market will win and have more competitive edge, more resources to invest in research and development and come up with new technologies to consolidate their position in the market. This time, it seems that businesses and common knowledge won the battle, albeit it's a small one.

Harvard professor Graham Allison dubbed the U.S.-China competition the "geopolitical Olympics," encompassing the economy, technology, military and other sectors. Interestingly, the Chinese Ambassador to the U.S., Xie Feng, who met Allison in Harvard, made a different point. While acknowledging competition between China and the U.S., he said it "should be like competing for excellence in a racing field, not beating one another in a wrestling ring."

On another occasion, Xie also said, "Competition is not the whole story about China-U.S. relations. We also need to prioritize cooperation" and called for abandoning the zero-sum game mentality and seeking common prosperity.

The many oft-conflicting reports from some U.S. media partly reflect the overall mindset of some U.S. politicians and their misjudgment of China and its rise as well as the conflicting perceptions of politicians and businesses about working with China. The Trump administration's latest policy reversal toward China sheds some light on Washington's realization, despite its assertions to the contrary, that the world's two largest economies cannot afford to decouple in today's interconnected global economy. But how long it will take for the two countries to get back to business as usual remains to be seen.

Frank Yang is a special commentator on current affairs for CGTN.