From Trade War to Tech War: Battle for Supremacy
Kamol Kamoltrakul
The US has been the dominant force in digital technology and doesn't want to lose its position. China is now striving to surpass America. At present, according to Bloomberg’s research, China leads in five out of 13 advanced technologies - unmanned aerial vehicles, solar panels, graphene, electronic vehicles and batteries, and high-speed rail. It is also competitive in other areas, including pharmaceuticals, large tractors, machine tools, robots, AI, semiconductors and commercial aircraft.
Hence, the "US-China tech war" is unavoidable with the US focusing on restricting China’s access to advanced technologies, like semiconductors and artificial intelligence, with the aim of limiting China's technological development and securing American dominance in the global tech market.
Some measures that have been used by the US include export controls, trade restrictions and investment limitations. This rivalry has intensified significantly in recent years, with both countries taking steps to protect their own technological advancements and potentially hinder the other’s progress.
According to the Reuters, the technology war between the United States and China has intensified considerably since 2017 through a wide range of measures: tariffs, export controls and market access restrictions. This war, which aims to dominate the technologies of the future, particularly semiconductors and artificial intelligence, has already cost China nearly USD150 billion in lost exports to the United States, forcing them to restructure their trade flows with a diversification of US imports from countries such as Mexico, Taiwan and Vietnam.
In 2022, former US President Joe Biden introduced sweeping measures to block China’s access to cutting-edge chips and chip-making technology. Since then, Washington has expanded the controls to cover a broader array of equipment and materials, including machines and tools made by Dutch giant ASML. In addition, in the same year in December, the Biden administration added more than 100 Chinese entities to its trade restriction list as part of its new package of controls.
Moreover, analysts from the CSIS (Center for Strategic and International Studies) pointed out that the United States issued its most stringent crackdown on China’s semiconductor industry, limiting its ability to develop artificial intelligence (AI) for modern military applications and adopting regulatory reforms to strengthen the enforcement of previous controls.
The new restrictions prohibit the export to China of 24 types of semiconductor manufacturing equipment and three related software tools. They also prohibit the export of advanced memory chips, chip-making machinery and other semiconductor technologies to 140 major Chinese chip manufacturers and toolmakers. These companies were also added to the US Department of Commerce’s Entity List—a blacklist that mandates US firms to apply for export licenses that will be near impossible to secure. To make the blacklist more difficult to bypass, the United States will apply the Foreign Direct Product Rule, which will impact non-US companies that utilize American chips in their tools and make it difficult for US firms to produce these tools in third countries and then export to China. The rule is designed to tighten the chokehold on China’s semiconductor industry, preventing Chinese firms from circumventing US export bans by importing chips and machinery with US-designed components. However, some allied countries may receive exemptions, affecting the efficacy of the rule.
The tightening restrictions have prompted Beijing to respond. China has retaliated with its own export restrictions, targeting key materials needed for chip production. Reuters reported in mid-2023 that the Chinese government started requiring export licenses for gallium, germanium, graphite and antimony, so-called super hard materials, to the United States due to their “dual military and civilian uses”. These materials are vital for making batteries, semiconductors, fibre optics and weapons. In addition, in response to Washington’s latest controls, the Chinese government announced an outright ban on some of these materials being exported to the United States – its strongest tit-for-tat measure yet.
In strategic materials and minerals, Beijing has gradually broadened its curbs to include both controlling exports of the key elements such as rare earths, tungsten and tellurium, as well as restricting the technologies used for their extraction, refining or processing.
Moreover, in December 2023, China expanded their controls even further to the technology and processes that turn refined rare earths into the metals and permanent magnets used in electric vehicles, wind turbines and electronics. At present, China manufactures 95%of the world’s permanent magnets.
Yet US restrictions have undeniably created serious hurdles for China's most ambitious technological pursuits.
This competitive dynamic has supercharged Chinese innovation across multiple domains. President Xi Jinping's recent acknowledgement of continuing technological dependencies masks significant progress toward the objectives of ‘Made in China 2025’.
CNA reported that when the US placed Huawei on its Entity List in 2019 - a move that barred the Chinese tech giant from accessing American technology without government approval - few could have predicted the outcome.
Written off by many after being cut off from advanced US technology, the company has emerged stronger and more vertically integrated. Huawei has built an entire semiconductor ecosystem encompassing everything from wafer fabrication to chip design. Its latest Mate 70 series smartphones, running on the completely indigenous Harmony OS NEXT operating system, represents a clean break from US technology dependencies.
Furthermore, the rise of the little-known Chinese tech startup has triggered alarm about the future of American dominance in artificial intelligence, erasing nearly USD 600 billion from Nvidia’s market value in just one day.
It has also highlighted cracks in US efforts to curb China’s technological advancements. Instead of stalling progress, Washington’s containment strategy appears to be having the opposite effect, accelerating China’s drive toward self-reliance and innovation.
DeepSeek stands out for delivering a cost-effective AI solution, and by focusing on creating an efficient algorithm, the firm has demonstrated China’s ingenuity in finding significant AI advancements even under hardware constraints.
The private sector in China, which competes with state-owned companies, contributes more than half of the county’s tax revenue, more than 60%of economic output and 70%of tech innovation, official estimates show.
According to Xinhua, President Xi Jinping attended a symposium of 50 private sectors held in the People’s Hall in early February 2025, and said, “The government has no choice but to support them if we want to compete with the United States.” The symposium reflected the serious concern of the party leader and included the CEOs of the top Chinese tech companies: Huawei's Ren Zhengfei, BYD's Wang Chuanfu, New Hope's Liu Yonghao, Will Semiconductor's Yu Renrong, Unitree Robotics' Wang Xingxing, and Xiaomi's Lei Jun. They put forward their opinions and advice on the development of the private sector. Participating entrepreneurs also included Alibaba founder Jack Ma, DeepSeek founder Liang Wenfeng, Tencent's board chairman and CEO Ma Huateng and CATL chairman Zeng Yuqun.
Xi told the participants, as reported by Xinhua, “The Party and country are committed to unswervingly consolidating and developing the public sector and unswervingly encouraging, supporting and guiding the development of the non-public sector to be able to compete in a hostile environment.”
Hence, the tech war…
