Former Biden Official: Don’t Buy Into Arguments for Loosening China Chip Controls
U.S. export controls on chips are working and should be maintained, not swapped in a trade deal as part of a “grand bargain” between the Trump administration and Beijing (see 2507150013 and 2508010002), said Rush Doshi, former National Security Council official during the Biden administration.
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Doshi, speaking during an event this week hosted by the Hudson Institute, added that the U.S. shouldn't give into the chip industry’s arguments that export controls on China limit American firms’ revenue and keep Beijing from being hooked on U.S. semiconductor technology.
“I think the export controls on compute work, despite claims to the contrary,” Doshi said. He said China hasn’t yet shown the ability to produce advanced, leading-edge chips “at scale,” and the country is still producing some lower-level chips using “largely American equipment.”
Doshi said that shows the U.S. doesn’t need to loosen restrictions on chips to get China “addicted to our supply,” referencing the strategy outlined earlier this year by Commerce Secretary Howard Lutnick.
“President Xi's own words [are] that he has zero desire to be dependent on those chips,” said Doshi, director of the China Strategy Initiative for the Council on Foreign Relations. Doshi also said “any chip you sell to China, in some ways, is a chip you don't sell to an American company,” and the demand for high-end chips in the U.S. is large enough to meet supply. He said he sees little point in chip companies making “$15 billion a year in extra profits” selling chips to China “that we could have gotten selling to American companies anyway.”
“I think a lot of our chip companies are doing pretty well financially, because their market capitalization is up 10x since the export controls came into place,” he said. “So I don't see the need to kind of relax the controls.”
But Doshi also suggested that doesn’t mean the U.S. should necessarily curb sales of chips to other countries, saying there is “no path to sustaining American manufacturing in the world without being able to sell to third-country markets.” Some Trump administration officials have made similar points, and the White House’s July AI Action Plan aims to promote exports of American AI technology packages to U.S. allies around the world (see 2507240019 and 2508080011).
“If China wins in every third-country market, then everybody loses,” Doshi said. “So there's a lot of incentive for countries to come together and create a wall or a moat or something that gives everybody in the club better terms than China, which should stay outside it.”
He added that much of the success of U.S. chip export controls is about “timing,” saying the restrictions rely on the fact that China still lags behind the U.S. technologically.
“If China is able to indigenously produce equivalent chips at scale, then I'm wrong,” he said. “But so far the leading experts in the area, including [U.S. government] experts, don't believe that's possible. [Chinese] Premier Li Qiang doesn't seem to believe that's possible. The CEO of DeepSeek doesn't seem to believe that's possible. So right now, I don't think I'm wrong. But I stand to be corrected.”
Gerard DiPippo, associate director of the RAND China Research Center and a former U.S. intelligence official, was asked during the event what concessions Beijing is seeking from the U.S. in trade talks. He said lower U.S. tariffs is likely at the top of China’s wish list, but relaxed export controls probably ranks second.
“Their dream is if there would be no restrictions on lithography machines,” DiPippo said, referencing the sophisticated equipment used to manufacture semiconductors. “That's probably not going to happen, but maybe slightly more doable would be [asking for looser restrictions on] high-end chips.”
One of the audience members asked the panel if the U.S. should welcome foreign investment by China in sectors like electric vehicles, so that the U.S. can lean on Chinese know-how to reindustrialize.
Doshi said it depends on the sector, but wherever it's done, "it has to be done in ways that reduce cyber security vulnerabilities, data security vulnerabilities."
He also said there needs to be attention paid to competition policies, "so that a Chinese joint venture can't put everybody else out of business."
He said technology licensing and perhaps some supply chain sourcing rules need to be developed "so they're not just doing final assembly in your country."
The problem is, he said, that there's no regulatory structure that exists for these approaches. "We have CFIUS, which says no. We have no structure to say yes."
He said he hopes Congress and the Trump administration can develop such a structure, maybe with a whitelist of sectors where Chinese investment is welcome, "that would allow us to benefit from their great advantages in manufacturing, and indigenize some of them in the United States. That's how they got successful."