Containing China's technology ecosystem will remain a US policy priority

The post-meeting readout by the White House conceded little, saying that the meeting was "Candid and constructive" and set the tone at the outset by noting that the US president "Emphasized that the United States and China are in competition, noting that the United States would continue to invest in the sources of American strength at home and align with allies and partners around the world." The Chinese framing was more conciliatory, with Xi saying "That the world is big enough to accommodate both countries, and one country's success is an opportunity for the other." The rest of the read-outs are re-assertions of their respective positions. So how come Xi Jinping turned down his cold imperial style and suspended the 'wolf warrior' mode of Chinese diplomacy for a meeting where the US conceded nothing? And, why, despite having so little to take back home, the Chinese foreign minister characterised the meeting as "Strategic, historic and directional"? It is true that Washington took the initial steps towards high-level engagement from the beginning of this year, but there is a distinct sense that Xi climbed down at San Francisco. New York Times journalist David Sanger observed that, "Mr Xi voiced his longest and loudest protests about the cutoff of the fastest computer chips, which Mr. Biden responded would help the Chinese military. The two leaders were at fundamental odds on that issue: What Mr Xi sees as economic strangulation, Mr Biden sees as an issue of national security." Chinese official media issued a reminder highlighting Xi's argument that "China's development is driven by innovation, and stifling China's technological progress is nothing but a move to contain China's high-quality development and deprive the Chinese people of their right to development." Cutting off access to cutting-edge semiconductors and production technology is a severe blow to the Chinese tech eco-system, potentially setting it back by as much as a decade. The Chinese state can throw money and people at the problem, but that means playing a game of catch up with a competitor that is already a couple of generations ahead. In an industry where time-to-market matters, weakness in the tech war leaves China with multiplying disadvantages. Just last month, the US government tightened sanctions on advanced chips and chip-making equipment, making it harder for Chinese firms to build competitive AI products. Some US politicians were infuriated that CEOs were paying so much money to rub shoulders with the Chinese leader, and have demanded a list of attendees from the organisers.