[Source/Author: Guancha Network Columnist Ya Mo]

The first round of the China-US trade war undoubtedly resulted in a significant victory for China, which is a fact acknowledged worldwide. There is no need to deny this victory just because it came unexpectedly. However, we should be concerned about the "rhythm," as this is only a temporary, localized ceasefire state, and there are still many tough battles ahead that require us to remain vigilant.

I personally divide the Sino-US competition into three battlefields: the trade war belongs to short-term博弈 (struggle), the technology war belongs to medium-term博弈, and the financial war belongs to long-term博弈. Although these battlefields are interconnected, the challenges they present are different. Therefore, after achieving initial results in the trade war, the rhythm of strategy becomes crucial.

By rhythm, I mean simply how to replicate the winning model of the trade war onto other battlefields while ensuring that strategies on different battlefields do not contradict each other. As long as the strategy is well-measured, it will help accumulate short and medium-term博弈 results and ensure long-term博弈 victory. This article focuses on the technology war aspect.

After Trump's administration conceded defeat in the China-US trade war, they immediately went to the Middle East to secure big orders, highlighting Trump's tactical flexibility and correct understanding of strategic priorities. We can criticize Trump, but we don't have to follow the Democratic Party's line of struggle and denigrate him as worthless, thinking we're dealing with a fool. In fact, that's not the case.

It should be emphasized that after "Liberation Day," China reaped the benefits of the trade war in geopolitical terms faster than the US. Trump's trip to the Middle East had an element of copying China's homework.

He realized that the gains from tariffs were limited and that China's firm stance caused other countries to slow down their negotiation pace. "Returning to square one" America must present "product combinations" that interest other countries and quickly achieve performance, prioritizing affluent nations where relations with the US are not strained.

Trump's gains from warming up in the Middle East

For product combinations binding security and technology, the Middle Eastern wealthy countries are undoubtedly the best buyers. Saudi Arabia, UAE, and Qatar are eager to transition from oil giants to tech giants and have long relied on the US for security. Trump can quickly secure large orders by simultaneously selling advanced weapons and tech products and intends to limit China's operations in this region to some extent.

Trump's visit to Saudi Arabia

Saudi Arabia 60 billion, Qatar 24.3 billion, UAE 20 billion; Trump holds over a trillion dollars' worth of Middle Eastern orders, masking his humiliation at being defeated by China. The American goods he sells include advanced weapons, AI infrastructure, Starlink, Boeing aircraft, etc., and he deliberately avoids Israel and lifts sanctions on Syria to please these wealthy countries.

Fairly speaking, this is something Biden, under deep-state control, would absolutely not be able to do. Of course, according to Democratic narratives, one could criticize that this would produce many side effects, but American politics has long suffered from "short-sightedness," and Trump doesn't care about what happens four years from now. This "product combination" can also be replicated in several countries that rely on the US for security, which is Trump's strategic rhythm, linking trade, finance, and technology battlefields together to stabilize the dollar, stabilize US debt, and stabilize technology.

In terms of technology, the US has determined to bind AI technology with its national destiny. Trump reversed Biden-era loss-making policies to secure non-Chinese orders for major AI companies. Indeed, this immediately drew criticism from hawks who questioned that exporting technology to the Middle East was tantamount to exporting it to China. However, if you ask any major AI company, none support the hawkish stance of self-imposed market restrictions. Thus, it can be said that Trump's technology war strategy, viewed from the perspective of US interests, far surpasses Biden's.

Of course, this does not mean that the Middle East has already chosen sides in technology. These three countries also strongly wish to maintain a positive and close relationship with China. Would Trump care if the Middle Eastern countries "smuggled" advanced chips to China? I believe he wouldn't care, and he might even hope for this to happen, as it would help raise his negotiation leverage against China. This is a field where one can act swiftly or turn a blind eye depending on the progress of Sino-US negotiations and technological advancements, and Trump needs more flexible operational space to adapt as needed.

From the public statements of major AI company CEOs, it is clear that the technological gap between China and the US is very small, and in some areas, China has already taken the lead. Therefore, blindly blocking off will result in losses for American companies rather than Chinese ones. The Biden administration's methodology is completely unpopular in the industry, whereas Trump could easily place the tens of billions of dollars in orders in the mouths of the hawks.

At the same time, the US government has introduced three policy guidelines to strengthen export controls related to China's AI. Among them, the "global manhunt" targeting Huawei's Ascend chip is the most eye-catching. When viewed alongside Trump's Middle Eastern strategy, it is clear that his strategic goal is "market share grabbing," while limiting Chinese-made chips to the Chinese market is secondary, as it is practically unachievable in reality. The former is offensive, and the latter is defensive; everyone knows that Trump prefers offense.

Three "policy guidelines" issued by the US Department of Commerce's Bureau of Industry and Security (BIS)

In other words, for China, Trump's current technology war strategy is more troublesome than the trade war. The phenomenon of "one world, two systems" is accelerating. The main issue at hand is whether China's strategy should adapt to or oppose "one world, two systems." If this is not clarified, the overall rhythm of the strategy will be disrupted.

Is "one world, two systems" a reality or a misconception?

To be honest, I don't know what China's stance on "one world, two systems" is, and the lack of clear guidance in policy may be due to the contradictory nature of this concept involving global trade and technological barriers.

In simple terms, does China still want to do business with the US? If yes, how do two clearly divided systems trade? If no, would this delay China's economic and technological development? This is indeed a dilemma.

Overall, China clearly supports globalized trade, which stems from confidence in its industrial and technological capabilities, believing that globalization benefits both China and the world. Conversely, the US clearly opposes globalized trade, which stems from a lack of confidence in its industrial and technological capabilities, believing that globalization harms the US.

If China thus does not welcome the emergence of "two systems" in the world, then the only way is for "technological superiority to prevail," forcing the US to follow suit, even if it resists. However, this clearly won't happen in the short term (within 10 years). Even if various technologies rapidly catch up, the US still possesses financial, military, and geopolitical tools to ensure that its "backward technologies" survive and resist stubbornly.

We must recognize that only revolutionary technology can break through political obstacles or hegemonic barriers. Simply leading in technology does not guarantee "full market access." AI technology has been viewed by the US as a national security issue, requiring independence akin to weapon technology. Therefore, recognizing the inevitability of "two systems" may be the more realistic attitude.

For example, take the three Middle Eastern countries visited by Trump. The US ban on Huawei's Ascend chip is ineffective for Saudi Arabia, UAE, and Qatar. The reasons are twofold: execution difficulties and fear of these countries turning to China to buy chips. After all, normal buyers still have a certain degree of autonomy, especially in competitive fields; sellers usually dare not force buyers too much because they fear the opposite effect.

These orders are not immediate transactions but require at least two years of engineering. The key point is whether the US can deliver so many AI chips (and other related equipment). This involves supply chain issues.

The goods delivered for these Middle Eastern orders must, of course, be made in the US, and the US promises the most advanced chips, which only TSMC can currently produce. However, TSMC's most advanced chip factory in Arizona will take at least two years to achieve mass production. If we also consider the price of chips, TSMC's Taiwan-based supply chain must be based in the US to maximize cost reduction.

TSMC's Arizona factory

In other words, TSMC and Samsung factories must first face high tariffs to ensure that US-made chips are produced on schedule and to prevent US AI factories from using Taiwanese or South Korean-made chips to fulfill orders. In short, the US still has many hurdles to overcome before it can fully enjoy Middle Eastern money.

For the seller, "two systems" means two independent supply chains; for the buyer, it means two different technologies (or two solutions). From a market perspective, if both technologies can achieve the same results, the deciding factor is price and delivery speed.

Based on this logic, China's counter-strategy is to persuade wealthy Middle Eastern countries to diversify their investments to avoid putting all their eggs in one basket. In terms of supply chains and technology, if there are "two systems," China has complete and cost advantages. If one insists on "one system," these two advantages will be discounted.

The key lies in which side, China or the US, can meet customer demands faster? It is widely recognized that "speed" is China's strength, which involves the winning mode of the trade war.

Hard-line tactics are the hard truth

How did China win the trade war? Ultimately, it comes down to the four words "dare to fight." This route is based on the correct strategic goal—aiming to stop the war, not to achieve a complete victory. The premise of this strategic goal is "understanding the opponent's intentions."

In the previous administration of Trump, China was unclear whether he wanted money or his life, but in this term, it is clear: Trump wants money, not his life. Perhaps, he has realized that no one can take China's life. Given this, if you give him money, he wins; if you don't, he loses. That's the simple truth, and the goal becomes clear: make the opponent hurt enough to initiate a ceasefire voluntarily.

This applies equally in the technology war. Biden's approach doesn't make money, so Trump rejects it and adopts a "grab market share" strategy to maintain technological superiority. Regarding containment methodologies, they must also conform to the "grab market share" strategy: containment leads to losses, so don't contain; containment benefits market share, so do contain. But the prerequisite for "grabbing market share" is having the ability to quickly meet market needs.

This is the strategic foundation of China's "dare to fight" approach—to make it impossible for the US to quickly grab market share. The toolbox includes but is not limited to rare earth control. After the ceasefire in the trade war, no one knows whether China maintains the rare earth control imposed after "Liberation Day," but according to media insights, China (should) maintained rare earth control.

I personally believe that as a key strategic tool, rare earth control requires a clear purpose—whether it is to respond to a trade war, a technology war, or some form of US attack? Some argue that setting a purpose is self-limiting, but as long as the goal is big enough, there is no problem of self-limitation. For example, as long as the US continues to supply arms to Taiwan, rare earth control will not stop; or, as long as the US continues to curb China's technological development, rare earth control will not stop. If the goal seems insufficient, it can be set larger.

In other words, rare earth control should be long-term, not easily paused.

AI technology heavily relies on chips, and in the chip manufacturing sector, the importance of rare earths does not lie in their price, as rare earth metals account for only 1%-5% of the cost in the chip manufacturing process. A shortage of rare earths will only increase costs by around 10%, depending on the type of chip and the supply chain's response capability.

A rare earth shortage primarily affects the "construction progress" of AI infrastructure. Not only chips, but related AI equipment also requires rare earth metals. Therefore, without rare earths, AI infrastructure cannot be built, let alone more rare-earth-dependent defense industries.

As of early 2023, the US's rare earth reserves were only enough for half of the Pentagon's needs and 1/10 of civilian infrastructure. With the rise of the AI industry, demand surged, and the US's shortage situation became even more severe. Various remedial measures (including recycling) were insufficient to cope.

Therefore, personally, I believe that as long as the US continues to use various means to hinder China's technological development, rare earth control should be tightened, not relaxed. Once Trump realizes that after going to great lengths to secure so many large orders, delays due to rare earth shortages render the effort futile, that would be a waste of work. If the reality is "two systems," rare earths have a pivotal influence on the health of supply chains and the cost of various technologies. China must dare to fight and end the era of American technology dominating globally.

China's Ministry of Commerce announcement regarding rare earth control

Aside from this, mandating that all parties, including domestic firms, establish factories in China must use domestically produced equipment is my repeated suggestion. Trump yearns for China's vast market, but if American factories set up in China, they must use Chinese technology, ensuring that even if the US grabs market share, it benefits China.

Admittedly, mandatory regulations to use domestic products may somewhat hinder innovation, but there are ways to address this, and we shouldn't abandon everything because of one problem.

As a countermeasure, borrowing force to our advantage is the strategy. As China's opponent, Trump's difficulty lies in his willingness to self-harm to win, only changing his attack strategy when his survival is at stake. This is based on a strong desire to win. In contrast, China consistently avoids responding with self-harm, which is responsible for enterprises and people. The key to victory or defeat in these two modes of game-playing lies in who has "longer breath." From the perspective of a technology war, if seeking "long breath," one must skillfully turn the opponent's attacks into shortcuts for self-replenishment.

Specifically, for example, the recent controversial Xiaomi O1 Ring, positively speaking, this is a hard-won technical breakthrough worth praising; negatively speaking, even discussing only the design end, O1 Ring has not achieved full self-research, making it easy for the US to cut off Xiaomi's lifeline from the ARM end. Therefore, government guidance for local businesses to fully self-research must introduce "American risks" into corporate operations and advocate for local enterprises to detach from the US after every suicidal attack policy is announced by Trump.

More importantly, for technologies that have achieved full self-research, the official should encourage and mediate local capital to promote and operate these technologies, assisting all local businesses in detaching from the US. Of course, as mentioned above, this must clearly define the future trend as "two systems" to enable joint efforts from officials and civilians to overcome difficulties and ensure victory in the technology game.

Can the winning mode of the trade war be replicated in the technology war? The answer is yes, although the tools may differ and methods vary, it remains a "wink game." As long as the goal is not to fight to death, facts prove that hard-line tactics are the hard truth.

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Original source: https://www.toutiao.com/article/7509280494559953443/

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