A Brief Discussion on the Impact of U.S.-China Relations

The competition between China and the US is different from the previous competition between the US and the Soviet Union. In the past, competition between the US and the Soviet Union was mainly based on competition in the fields of sea, land, air, and space. Because technology at that time was not as advanced as it is now, the field where everyone competed was limited, but with the collapse of the Soviet Union in 1991, then-US President George W. Bush delivered a televised speech announcing the end of the Cold War between the US and Soviet Union. One side sang, one side appeared. With the end of the Soviet Republic, China became the second largest economy in the world, and competition between the US and China became more and more intense. $SSIF DCE Iron Ore Futures Index ETF(03047.HK)$

The current competition between China and the US is actually a strategic competition in virtual space and natural space at the same time. The role of virtual space is huge, and the digital economy has become the main source of wealth for major countries. The digital economy refers to a new form of economy reshaped by optimizing the economic structure through advanced digital technology using big data and digital information as key production elements. Among them, digital industrialization (that is, telecommunications, information technology, and the Internet industry have become the main industries in society) and industrial digitalization (upgrading traditional industries, including but not limited to emerging technologies such as artificial intelligence, blockchain, and the Internet of Things) are the main productive forces for developing the digital economy. Technological innovation has continued in these fields in recent years. Recently, chatgpt has become a hot topic of attention. It has a wide range of applications, mainly relying on the ability to gather information for transformation. What is the meaning behind the digital economy? The more data we collect, the more resources we have, and that means more wealth. The core of digital technology is actually the performance of chips in terms of hardware. With the continuous improvement of chips and combined with research in other disciplines, digital technology is developing very rapidly and is becoming more and more important to a country, and technology is the primary productive force. The United States passed the “Chip and Science Act” in July 2022. The chip provisions include four core elements, involving direct financial subsidies of 52.7 billion US dollars and tax deductions of about 24 billion US dollars. They can be used not only for the construction of new semiconductor manufacturing facilities, but also for the expansion of existing fabs. The first is direct funding totaling 39 billion US dollars to subsidize local semiconductor manufacturing for a period of five years. Because of its importance, this provision has the same name as part of the bill, and is also known by the industry as a CHIPS subsidy. Second, it provides a 25% tax credit for investment in semiconductor manufacturing, also known as the FABS Act. From fiscal year 2023 to fiscal year 2027, the total amount of tax refunds is expected to be $24 billion. The third is a special fund of 11 billion US dollars for advanced semiconductor technology and packaging research. Fourth, it provides 2.7 billion US dollars for labor development and education in the US chip industry to carry out a series of subsidy programs to train industry engineers and skilled workers. At the same time, companies such as Intel, Samsung, and TSMC are encouraged to build factories in the US, and some provisions restrict the relevant companies' economic, trade and investment activities in China. The US has long sued China for unfair competition in the WTO, using state subsidies to support scientific and technological innovation, and using national power to conduct corporate competition, but the law introduced by the US also uses the same method. $Taiwan Semiconductor(TSM.US)$ $Intel(INTC.US)$