Will the US Sanction China? Or will China sanction the US?

The Biden administration is considering sanctioning China for supporting Russia in the Ukraine war. These sanctions would be more likely if China adds lethal military support (weapons, ammo) to their current non-lethal support. China currently ignores US and EU sanctions on Russia, trading a wide range of goods with Russia, including buying a large amount of oil. China is the number of buyer of Russian oil.

China already also provides, well, SOMETHING substantial to Russia, possibly to support their war effort. But what that might be is a matter of speculation. A Ukrainian publication, Defence Express, has published a few articles on this topic here:

* Russia Actively Supplies Something From China With the An-124 Cargo Planes: Flights Conducted Almost Every Day (27 Nov 2022)

* Air Bridge From China to russia: Can it Be Weapons Or a Different No Less Threatening Cargo (29 Nov 2022)

* China Not Supplied Weapons to russia Yet, But Some Related Things Have Been Recorded – U.S. Intelligence (4 Dec 2022)

* China-russia Air Bridge Has Intensified: Over 50 Transfers in a Month by An-124 and Il-76 Transport Aircraft (24 Dec 2022)

* What russia Can Offer to China For Weapons Against Ukraine, The Answer is Very Prosaic (25 Feb 2023)

Over 100 flights of heavy transport airplanes have flown from Russia to China, and then back to Russia, usually to cities known to be involved in wartime production. One type of plane has a max cargo limit of 150 metric tonnes and the other 40 tonnes. One speculation is that China is sending the heavy machinery useful for making weapons and ammunition. But they could also be sending some weapons parts, made in China. Another possibility is that some shipments contain microchips or various circuit boards with those chips, which needed for almost every type of electronic weapons systems. It is also possible that China is helping Russia with its (rather limited) semiconductor manufacturing.

The above considerations are enough for the US to consider issuing sanctions against China, based on their support for Russia in the form of buying oil, as well as providing shipments of machinery, parts, and materials. If China begins sending weapons and ammunition, sanctions from the US and possibly the EU become more likely.

What might China receive from Russia in exchange for taking this provocative action of sending weapons? Russia might send weapons to China, as China is in the midst of a massive buildup of their military. Or they might agree to help China take control of Taiwan.

* Russian Warplanes Landed At Chinese Airfield For 1st Time As Part Of Joint Patrol – RuMoD Says

* Japanese, Korean Fighters Scrambled in Response to Joint Russia-China Bomber Patrol

The above news articles describe a joint exercise in which Russian and Chinese fighters and bombers flew into the Air Defense Identification Zones (ADIZ) of both South Korea and Japan. Fighter jets were scrambled from both Korea and Japan. The Russian and Chinese planes then turned back. The Russian planes landed in China, and the Chinese planes landed in Russia. The apparent meaning of this action is a type of threat, that Russia and China could potentially fight together in a war.

Here’s how U.S. sanctions work. The US, EU, and other nations are sanctioning Russia over the war in Ukraine. But if any third-party nation does not obey our sanction laws, they will be struck with “secondary sanctions” against that nation. The US ambassador to the UN threatened the nations of Africa, that if they were to violate sanctions against Russia, by purchasing fuel or any other sanctioned goods, they would be punished by the US with secondary sanctions.

I’m not going out on a moral theology limb here, when I say that it is immoral for one nation to make laws which force other nations, nations that have no say in those laws, to comply, under threat of economic or other punishments. The US makes laws under democratic principles, laws which apply to the US. We can refuse to buy or sell with another nation, if we wish. But to make laws that propose to bind all nations, via primary and secondary sanctions combined, has no basis in democracy, and is instead autocratic.

On a more practical level, the US and EU have established, by their behavior, that it is not against international law to issue primary and secondary sanctions. Russia is gravely wrong to invade and make war against Ukraine, and Ukraine is exercising its fundamental human right of self-defense by fighting back. But our just opposition to Russia’s warfare does not justify attempting to compel all nations on earth to comply with our decision on how to respond.

It is also hypocritical that any nation in Africa, in need of fuel oil, will be punished if they buy from Russia, but the US and EU allow Bulgaria — a full member of NATO and the EU — to be the third largest buyer of oil from Russia, by sea, and allow the EU to continue buying oil (and natural gas) from Russia by pipeline. Yet other nations around the world would be violating sanction laws, and might be struck with secondary sanctions, if they buy Russian oil.

“Bulgaria has become the third-largest buyer of Russian oil in the world. Bulgaria received an exemption from the EU ban on Russian seaborne oil imports, which became effective in early December. Since the ban was put in place, Bulgaria has increased Russian oil deliveries by 30 percent.” [OilPrice.com]

The UK has boasted that they no longer buy Russian diesel fuel. But they now buy a large amount of diesel from India, which is the second largest buyer of Russian oil. That Russian oil is used to make diesel in India, and the diesel is then sold to the UK. Buying Russian diesel directly is sanctioned by the EU, yet buying Indian diesel made with Russian oil is not.

The E.U. has purchased hundreds of millions of dollars’ worth of diamonds each month — over a billion dollars’ worth in 2022 — from Russia by way of India. The diamonds are mined in Russia by a company one third owned by the Russian government. Then the Russian diamonds are cut in India (where 90% of diamonds worldwide are cut). Finally, these diamonds are shipped to the EU diamond industry, which is largely in Belgium. See this article: Belgium’s trade in Russian diamonds continues despite moral pressure, The Guardian (UK), 20 Nov 2022. The EU still today, after 10 rounds of sanctions, does not sanction these diamonds. Twice they put language in the law for a round of sanctions, to stop this flow of diamonds, and twice that language disappeared in the final versions (7th and 8th rounds).

But if the nations of Africa or other regions of the world were to buy fuel and other goods they need from Russia, they face punishment from the US and EU by way of secondary sanctions. Belgium gets its Russian diamonds. Bulgaria gets its Russian oil. But the less influential nations of Africa better not buy anything sanctioned from Russia, or the Western nations will punish them. Hardly seems fair.

In any case, all this has established that issuing primary and secondary sanctions is not against international law. China by itself, or Russia and China, could issue sanctions against the US and EU, and it would be hard to argue that this is against international law. We can’t argue that we are the good guys, and they are the bad guys, and therefore a different set of rules apply to us. That is not how the rule of law works. And in any case, they will ignore any judgments about international law, or any decisions of the World Court or the UN against them. They can issue sanctions against us, and we should take into account that possibility, before issuing sanctions against China.

What could China do, if the US (with or without the EU) were to issue sanctions against us?

1. China has a vast amount of weapons and ammunition stored up from its multi-year military buildup. They could flood Russia and therefore Ukraine with ballistic missiles, drones, tanks, and other weapons, changing the balance of power in Ukraine.

2. China could take control of Taiwan. They absolutely are willing and planning to do so, sooner or not much later.

3. China, with control of Taiwan, could issue threats to certain nearby nations, in order to gain control of semiconductor production and exports in Japan, South Korea, and other Asian nations. This set of nations offers such a large percentage of so many essential products that China could thereby obtain control over the vast majority of semiconductor production worldwide.

4. China could use that control to issue primary sanctions on semiconductor chips, machinery, and supplies against the US and EU, putting our economies, militaries, and infrastructure in a dire state, and requiring us to comply with their demands, in order to have the sanctions lifted. Nations that offer us semiconductor help would be struck with secondary sanctions from China.

War in Ukraine and China

NATO is running out of ammunition to send to Ukraine. The US makes 15,000 rounds of artillery shells a month. We have already sent, from our own defensive stockpile, by Presidential Drawdown Order, over 2 million rounds of artillery shells, along with many other weapons systems and ammunition [U.S. State Dept. website, March 20, 2023]. Europe has similarly depleted its stockpiles of weapons and ammo. NATO is literally unable to fight a second Ukraine-level war at this time. And NATO does not have the resources to continue to supply Ukraine with ammunition at the same rate in 2023 as in 2022. The ammunition production capacity does not exist across all of NATO. If the US were to spend 12 to 18 months ramping up the production of artillery shells, we could reach a maximum production capability of 70,000 shells a month. So we can’t give Ukraine another 2 million rounds of artillery shells over the next 12 months.

The US has promised Ukraine 31 Abrams tanks. We have also promised 250 tanks to Poland, to replace the tanks they already sent to Ukraine. And we have promised Abrams tanks to Taiwan. The US makes these tanks in only one facility. It takes 6 months to make an Abrams tank, and the one factory can churn out tanks at a rate of 12 tanks a month (given that the production pipeline is continually full). Then we can’t give Ukraine Abrams tanks from our existing stockpile, as the US version contains highly classified electronics and classified armor which is never sent to any US allies. News reports say that the export-version of the Abrams tank should arrive in Ukraine in late 2023 to mid-2024. That sounds too late to me.

So if China sends a vast amount of artillery shells, missiles and weapons to Russia, NATO cannot match that ammunition and weapons delivery rate.

Another issue is troop numbers. None of the 50+ nations now sending lethal military aid to Ukraine are sending troops, and none are willing to do so. Ukraine is working with a limited number of troops. Millions of Ukrainian citizens have fled the nation due to the war, and so it would be very difficult to recruit new troops from those refugees. Russia is fighting a war of attrition; they are diminishing the number of Ukrainian troops month by month. At the same time, due to the past partial mobilization, and Russia’s yearly mandatory conscription, Russia can continue to send new troops into the battlefield. Russia has a troop supply advantage, and if that advantage is supplemented by an ammunition advantage, with the help of China, Ukrainian defensive lines might collapse.

I am not saying this will happen, and a hope it will not happen. But it is a real possibility that must be considered.

Ukraine could find itself in a situation in which they are unable to hold a 1000 km defensive line due to a lack of troops and lack of ammunition. If their defensive lines collapse, Russia could send in troops in the south, near Odessa, and in the northeast in Kharkiv oblast. With no defensive lines, Russian troops could attack any city, and Ukrainian troops would be hard pressed to respond. I’m not saying this will happen, but it is a possibility if the balance of power is altered by China supplying weapons and ammo.

In such a near-worst case scenario, NATO would still not send troops into Ukraine. It is not true that our troops can easily win in any military conflict simply by our more sophisticated weapons and better training. And we don’t have the ammunition to fight a protracted war with Russia and China together. We don’t have the ammo, and we don’t want to lose a large number of troops. NATO is all too happy to fight a proxy war against Russia, in which over 100,000 Ukrainian troops have died, but few if any NATO troops have died. But our politicians and populations will not support a war with large numbers of troop deaths from their our own nations.

In such a scenario, and again, I’m not saying this will necessarily happen, the US would have to commit a large number of troops to defensive positions in NATO nations, in case Russian troops take Ukraine and decide to attack further into Europe. And what is the advantage to China? China would then be able to take control of Taiwan, as the US cannot fight even a limited war with China over Taiwan, while committing military resources to Europe against a possible Russian advancement.

See this article: War game suggests Chinese invasion of Taiwan would fail at a huge cost to US, Chinese and Taiwanese militaries, CNN, 9 Jan 2023

See also: China’s Three Roads to Controlling Taiwan (March 13, 2023)

In a battle with China over Taiwan, the US could lose two aircraft carriers and dozens of other ships, as well as thousands of troops. We would also be in danger of running low on missiles and other ammunition. Our ships cannot sail close to China while fighting a war with China. At a certain point, our ships will run out of munitions, while China has plenty of supplies from the nearby mainland.

What is more likely than a war over Taiwan, is a Fait Accompli takeover of Taiwan. This type of scenario could occur in a number of ways: a lighting strike on Taipei to capture the capital; an air and sea embargo, shutting down their economy until they accept Chinese rule over them; or a briefcase war.

In the latter scenario, a low-level Chinese diplomat visits Taiwan with a set of documents in a diplomatic briefcase. In meetings with Taiwanese leaders, the situation is laid out in the documents. There may be some negotiations, secretly, with documents traveling back and forth between mainland China and Taiwan in diplomatic briefcases, until an agreement is reached. But despite any negotiations that might occur, there are really only two options:

Option 1: Taiwan accepts a new status as a Semi-Autonomous Region of China (PRC), with the Chinese government controlling its military and economy.
Option 2: China attacks Taiwan, not with an invasion, but solely with a series of missile strikes.

In the latter option, some missiles will penetrate Taiwan defenses and strike the power plants, semiconductor industry, and other major industries. It will not take many days, at the high rate of fire of which China is capable, to destroy the Taiwanese economy. Then the missile barrage would stop, and Taiwan would no longer be capable of returning to its place as a developed wealthy nation. Any recovery over time could be met with another missile barrage. Taiwan is so close to mainland China that no ships or planes need to be used. And China has the production capacity to commit a large amount of missiles to such a task.

Taiwan would have no choice but to sign the documents and become an official semi-autonomous region of the People’s Republic of China. The West would wake up one morning to find that this event was a Fait Accompli — an act that is already completed. The US would have no opportunity to intervene. No battles, no invasion, no military strategies. Just paperwork and blackmail. Its dirty politics, but it may be China’s easiest way to control Taiwan.

Does this seem unlikely? The US National Defense Authorization Act, passed in late 2022, repeatedly cautions against a Fait Accompli takeover of Taiwan by China. Congress considered this possibility to be likely enough to include in the latest defense budget law.

So Chinese support for Russia in the Ukraine war could result in the US having to commit troops and weapons to NATO nations, weakening our position in defending Taiwan. China could then take control of Taiwan by a Fait Accompli, leaving their semiconductor industry intact.

Why would China want control of Taiwan? In addition to their one China policy, China has strong reasons to move against Taiwan at the present time. China’s buildup of its military, as well as its economic goals and desired technological progress, all require semiconductors — also called microprocessors, microchips, or simply chips. The US has for years placed what I would call “semiconductor sanctions” against China.

Technically, it is the Foreign Direct Product Rule (FDP), in which two lists control exports from and to other nations. In compliance with this Rule, product A must not be exported from any nation B to any nation C — if product A is on a certain list of products and nation C is on a certain list of nations. By curating these lists, the US compels other nations to deny products which are said to be a matter of national security (like advanced semiconductors) from certain nations. Nations which refuse to comply are struck with a ban on certain products and services from US companies as well as a ban on use of US intellectual property, such as software and patents. This pressure to comply is sometimes wielded against top US allies, not only against nations with a less-cozy relationship with us.

In this way, the US has prevented China from obtaining the most modern chips and chip-making equipment, termed EUV (chips made with Extreme Ultraviolet Light). This technology first went into production in 2018. EUV lithography machines (chip-making devices) are made only by one company, ASML, in the Netherlands. Only three nations to-date make EUV chips (7nm, 5nm, or smaller process nodes) — Taiwan (~90%), South Korea (8%), and the U.S. (~1%). These numbers are rounded and are estimates. All nations complied in preventing China from getting EUV technology and chips: Netherlands, Taiwan, South Korea, and the U.S. of course.

This FDP Rule had limited China to the use of chip technology prior to 2018, when EUV technology went into full production. This limits their military, economic, and technological progress, apparently irking Chinese leaders. The goal is to keep the US as a greater military and economic power than China. The Biden administration has bipartisan support for this policy.

Then, in December, 2022, the Biden administration added DUV (deep ultraviolet light) chips and technology to the FDP ban against China. The only nations which make DUV lithography machines are the Netherlands (ASML) and Japan (Nikon, Canon). Those two nations did not wish to comply with this new restriction. But after a series of very nicely worded threats under the recently revised and expanded FDP rule, they finally agreed to comply, at the end of January 2023. See this article: US-Dutch ‘deal’ on export controls reeks of coercion, Bits&Chips, 14 Feb 2023.

DUV chip technology began volume production with memory chips in 2008. Formerly, China could have chip tech from 2017 or earlier, now they can only have chip tech from 2007 or earlier. This new restriction on China sets them back ten additional years of semiconductor progress, for a total of 15 years of denied technology progress, representing several chip technology nodes. Current (2023) State-of-the-Art chips (5nm) are at least 14 times more powerful (5 full nodes at 70% increase in processing power per node) than chips from 2007 (28nm).

Financial Times: America’s chip controls on China will carry a heavy cost (7 Nov 2022)

This latest restriction was not a secondary sanction related to the war in Ukraine and China’s violation of primary sanctions against Russia. It is merely a decision based on the US goal of remaining a greater military and economic power than China. This is a bipartisan goal, consistent across the administrations of Obama, Trump, and Biden.

China is very unhappy with this recent restriction. They already have home-grown lithography machines (likely designed with some stolen intellectual property) at 28nm. They have been making progress in designing and manufacturing chips with more advanced chip processes, but likely at lower production volumes. The new restriction will seriously hamper China’s goal of making the most advanced military equipment and weapons in the world. They are now stuck with older chip tech, and chips are essential to modern military equipment and ammunition: drones, missiles, smart artillery shells, planes, tanks, ships, surveillance and communication equipment, and much more.

How can China break through this restriction? The most likely means would be to take control of Taiwan by a Fait Accompli, leaving the entire Taiwan semiconductor industry intact and subject to the will and whim of the Chinese Communist Party and its General Secretary Xi Jinping along with their military and economic goals.

There are three main ways to evaluate the share of the semiconductor industry in each nation:
(1) silicon wafer capacity, which is a direct indicator of the chip production capability per month or year of a nation’s industry
(2) dollar share of global chip making
(3) share of equipment and supplies needed for the manufacture of chips

Do not be fooled by dollar figures using corporate sales figures in the U.S. These sales rely heavily on imported chips for the final product (cellphone, computer, etc.) and those chips are mostly made in Asia. The dollar sales figure that matters is the sale of the manufactured chips, as most chips are made in a “fab” that sells nothing but its chips.

Taiwan has 48% of global wafer capacity, while China is said to have 15%. However, some estimates of China’s current wafer capacity exceed 20% of global. South Korea has 21% and Japan 15% of global wafer capacity.

Semiconductor Industry Association: “The top global locations for semiconductor wafer fabrication capacity share are Taiwan (22%), South Korea (21%), Japan (15%), and China (15%). Combined these countries account for about 75% of the world’s total semiconductor manufacturing capacity…” [actual total is 73% from SIA figures. China capacity is over 20% per 2020 figures from European Semiconductor Industry Association, making the total 78%].

Once China controls Taiwan, they will control 63% of chip making production capacity (48% + 15%). Using the 20% figure for China instead of 15%, this number becomes 68% of chip making capacity.

By comparison, using dollar value of the chips made, Taiwan has 65% of chip production value, because they make 90% of the most advanced chips (7nm and smaller), and a high percentage of leading-edge chips (22nm to 10 nm). Then China has only 5% of the dollar value of chip production because their 15 to 20% of chip making by number of silicon wafers uses older chip technology, making lower cost chips. But by dollar amount, if China takes control of Taiwan, the total would then be 70% of worldwide chip production value for China+Taiwan.

Most of the rest of global chip-making production is in Asia. By wafer capacity: South Korea (21%), Japan (15%). Then, for the most advanced chips, Taiwan (90%) plus South Korea (8%) accounts for ~98% of 5nm chip production by wafer production capacity.

Next, China, with control of Taiwan, could take a page from the US playbook and issue primary and secondary sanctions, specifically regarding semiconductor production.

Japan could not withstand semiconductor sanctions from China+Taiwan. They control more than just chip production; they also control many different types of supplies and machinery. But they don’t make enough chips for their infrastructure, economy, and military. Many of their chips are for products that will be exported.

“Semiconductor manufacturing uses more than 50 different types of sophisticated wafer processing and testing equipment provided by specialist vendors for each step in the fabrication process.”[1]

“Although macroeconomic factors caused the current chip shortage, it is conceivable that an adversary could deliberately restrict access to chokepoints in the chain to exact political concessions. In particular, if China can develop and scale production capabilities to develop monopolies over irreplaceable components, Beijing could intentionally disrupt the civilian and military supply chains of the United States, South Korea, Japan, Taiwan, and other nations. A National Security Commission on AI report to the Congress said, ‘If a potential adversary bests the United States in semiconductors over the long term or suddenly cuts off U.S. access to cutting- edge chips entirely, it could gain the upper hand in every domain of warfare.’ “[2]

“Supply-chain vulnerability is inherent to the semiconductor industry because of its distributed, interdependent, and concentrated nature. No country is vertically integrated, and, therefore, all rely on supply and cooperation across the region. This global value chain boosts price efficiency and leads to performance improvements. The capital intensity of chip design and production has spurred specialization. While there are a handful of integrated device manufacturers (such as Intel) that both design and produce chips, many firms specialize in either research and development (R&D) (called fabless firms) or manufacturing (called foundries). There are more than 50 points in the supply chain where a single region has in excess of 65 percent of market share. The highly concentrated nature of the industry makes supply chains extremely vulnerable to natural disasters and geo-political risk.”[2]

1. Semiconductor Industry Association (SIA) [PDF]
2. CTO.mil — DoD Chief Technology Officer

Semiconductor manufacturing also requires a wide range of supplies in the form of machinery, high-purity silicon, as well as specialty gasses, liquids, and metals, with few sources in the world (especially at the level of purity needed). When these supplies are added to China+Taiwan’s wafer capacity, Japan could not continue to supply its society with the necessary chips for military, economic, and essential infrastructure uses. Japan does not supply all of the components needed for full semiconductor production; they rely on imports from China and Taiwan to a large extent. And since Taiwan makes most of the State of the Art chips (5nm) in the world, Japan would be in dire straits if they did not agree to comply with Chinese semiconductor sanctions against other nations. Secondary sanctions from China against Japan would be devastating.

The same can be said of South Korea. While SK makes a decent proportion of 5nm chips at 8% of global production, their chip making is geared towards memory and cellphones, with far less production for essential infrastructure. Like most wealthy nations, SK obtains the far less advanced and much cheaper infrastructure chips from other nations. Their high production of chips designed largely for export is not sufficient to meet the needs of their military, economy (e.g. cars), and infrastructure. South Korea would have to comply with Chinese semiconductor sanctions.

The threat of sanctions from China+Taiwan against Japan and South Korea would be very likely to prevail over U.S. diplomacy and/or threats. Semiconductors are absolutely essential to modern society and modern militaries. With control over Taiwan, Japan, and South Korea, China could then advance to threaten semiconductor sanctions against Malaysia, Vietnam, Thailand, Singapore, and other East Asian nations involved in various aspects of the semiconductor industry.

If China+Taiwan succeeds in such an endeavor, compelling that set of Asian nations to comply with whatever semiconductor sanctions China issues against other nations, China would control almost all chip production worldwide.

The US has 12% of global wafer semiconductor production capacity. But we do not make all of the supplies needed in equipment and materials to continue production at that capacity. Without the above described set of Asian semiconductor nations, US production will quickly fall from perhaps over a billion chips a year to as low as hundreds of thousands of chips a year. But that number doesn’t matter much, as the US needs to import over 100 billion chips a year, in addition to our own production capacity, to maintain infrastructure, military production, and the economy.

Primary semiconductor sanctions from China against the U.S. would collapse the stock market and send shockwaves through the economy. The US would face an economic catastrophe. Worse still, both essential and important infrastructure in the US would begin to degrade. Power outages need to be fixed by replacement of parts that include chips. Power plants, including nuclear power plants, need to be able to replace electronic equipment, computers, and circuit boards all of which require chips. Water, sewer, traffic lights, radar, and a flow of new cars, trucks, planes, and ships for transportation all require microchips. New agricultural machinery requires chips. Across all infrastructure, merely maintaining the status quo requires billion chips a year. Without that flow of chips, infrastructure cannot be repaired or maintained, and old infrastructure cannot be replaced with new.

Department of Defense buys over 2 billion chips a year, in a non-war year. If a type of military weapon, ammunition, or other supply does not contain chips, it is made in a factory that uses many chips. The US does not have the capacity to make all these chips for our military, even if all chip capacity went to that purpose. If the US were under such semiconductor sanctions as described in the above hypothetical (but entirely possible) case, the US military would be unable to support the war in Ukraine, unable to support NATO nations, and would have to withdraw a large portion of overseas troops, weapons, ammunition, and equipment to our own territory. We would not be able to fight a war overseas at all, as the loss of the semiconductors in those weapons and ammo would be irreplaceable, leaving us largely defenseless.

In addition, the US would face economic collapse. If a product in the US does not contain chips, it is made in a factory that uses chips. Then, if China were to strike the US with sanctions of all Chinese goods, we would lose 500+ billion dollars of imported products from China. Many of those goods are electronics that contain chips, so such an accompanying “electronic sanctions” against the US by China would be a possibility. The US does not have sufficient manufacturing capacity, nor sufficient workers, to replace all the goods that we import from China. It is true that we ship about 150+ billion dollars’ worth of goods to China, but these items are not the same type as imported from China. And without materials and chips imported from China and Taiwan, US production of goods will become increasingly difficult.

In a worst case sanctions scenario, companies would lay off workers; many other companies would collapse and go bankrupt. Factories, unable to replace computers, circuit boards, or any factory parts containing chips, would begin to reduce production, reduce their workforce and eventually shut down. The massive decrease in workers and business income would reduce tax income to all States and the Federal government. The nation would face defaulting on the national debt, and the inability to pay Social Security benefits and military benefits. The money available for defense would have to be severely decreased. We would not be able to pay all our troops in active service, and would have to reduce troop numbers.

The alternative, would be for the US to comply with China’s demands in exchange for an end to semiconductor and other sanctions against the United States. These demands would likely include complete and permanent acceptance of Taiwan as an integral part of China, withdrawal from all bases in the region, including Japan, the Philippines, and Guam, acceptance of China’s claims to large areas of open seas as territorial waters, and perhaps more. In this situation — which I emphasize can happen but is not particularly likely — the U.S. would have to comply.

Is Congress and the DoD aware of this vulnerability? Of course they are. That is why they went from putting 7 billion dollars into the problem in the 2020 Chips Act, to throwing another 106 billion dollars into the semiconductor vulnerability in the 2022 Chips and Science Act. The latter bill has a total cost of 280 billion dollars. It was a democratic bill promoted strongly by President Biden. But the majority Republican leader of the Senate and other top Republicans voted for it. Many different government reports had previously laid out this vulnerability regarding semiconductors (Congressional Research Service; Defense.gov; CTO.mil; etc.). But in 2022, a takeover of Taiwan by China, via Fait Accompli that would leave Taiwan’s semiconductor industry intact, became a much more likely possibility. So they increased the money invested in U.S. semiconductor production by an additional 106 billion dollars.

So you can see why I think it is unwise, imprudent, and even idiotic, for the United States to keep provoking China with semiconductor sanctions (under the FDP Rule), with air and sea trips through the Taiwan Strait, with billions in military aid to Taiwan, with diplomatic trips to Taiwan, with threats of sanctions if China supplies weapons to Russia (or even if they do not). The United States is not an all-powerful military or economic power. We should not be speaking and acting as if we rule the whole world. And if the U.S. does not correct its position regarding other nations, then, sooner or later, some nation or group of nation is going to apply sanctions of one kind or another to us, and we will learn a hard lesson.

This article is not a prediction of future events. It is a consideration of possibilities based on the current political and economic situation in the world.

Ronald L. Conte Jr.
updated 23 March 2023 with latest State Dept. figures for artillery rounds [U.S. State Dept. website, March 20, 2023]

1. Semiconductor Industry Association (SIA), Before the Bureau of Industry and Security, Office of Technology Evaluation, U.S. Department of Commerce, In the Matter of Executive Order 14017 of February 24, 2021, “America’s Supply Chains”
2. CTO.mil — The Under Secretary of Defense for Research and Engineering, Chief Technology Officer (CTO)

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6 Responses to Will the US Sanction China? Or will China sanction the US?

  1. Ben says:

    Ron, excellent analysis! China’s threat is more real than many of us realize, and can unfold even before the nuclear war. China it is too far you know…12 hours by plane or less, and everything we buy everyday that is not food comes from China, with a small portion of it from other third world countries. We don’t even know what portion of it is not made in China but outsourced. Does it matter? Unless a miracle happens, like 3D printing revolution, we are doomed without the Chinese input in the global economy. Will 3D printing happen on mass scale? As I can see, nobody cares of that when everybody prepares for a major, major war (to avoid the term WW3 that almost lost its frightening sense because of endless repeating).

    And I wonder, why the Vatican actually is doing near Nothing? Consecrated Russia, good…why it didn’t actually work? Who screwed it up there? Certainly the pope knows. Better they go than we, Your Holiness!

    • Ron Conte says:

      If the consecration worked, we still cannot expect immediate results. A person converts, but the outward signs that people will notice might take some time. I think the Warning is this year, and with the consecration will change Russia and end the war. The consecration does not work alone, but with the prayers and treasury of merits of the Church, and the providence of God, etc.

    • James Belcher says:

      One very important aspect of China’s aggression not being reported is the 42 China Militia Vessels 4 miles of the coast of the Philippines. The Philippines coast guard has told them to leave but China remains and has not responded to the Philippines coast guard. Two weeks ago, the China Coast Guard sent a laser beam to the vessel of the Philippines blinding the personnel for 15 seconds. China’s buildup of the artificial military islands within 12 miles of other countries is illegal.
      Japan has transferred military jets to the Philippines for the first time in history while Australia, Japan and the USA are performing military sea drills with the Philippines.
      I believe a possible blockade by China is in the offering or at the very least – China is testing the USA commitments with its allies.

  2. Jay says:

    Good article. The most important factor in the geopolitical landscape is the petrol dollar vs. the BRICS nations. More and more countries are signing up to leave the dollar currency with Mexico applying most recently. Assuming all countries who have applied get admitted, the GDP of the BRICS nations will exceed those on the petrol dollar. In the end, this leads to hyperinflation for the west as we will need to continue trade internationally and will have to lean on the gold standard (Which is what backs the BRICS nations). And the sanctions game gets completely flipped on it’s head. Side note: I found it interesting that at the current moment, 8 of the 10 top oil exporting nations have either applied or are already part of the BRICS alliance.

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