US President Donald Trump’s all-out assault on China seems to have backfired. The US China balance of trade figures — the much-touted China trade deficit — is actually larger now than it was when Trump was elected. The trade surplus with the US hit US$34.2 billion ($46.7 billion), the largest on record. The 9.5% y-o-y increase in China’s exports during August have also highlighted the rebound in the world’s second largest economy as the US continues to struggle with its own Covid-induced crisis.

The sanctions imposed on chip-makers have deprived those companies of their major market. Worse than that, it has also accelerated the move towards self-sufficiency by Chinese chipmakers. It is nonsense to believe that the thousands of people in China involved in the semiconductor industry are incapable of developing new and more advanced chips.

When relations normalise, the existing US chipmakers and their suppliers may find there is no longer a Chinese market interested in their product. This is an investment problem searching for a solution, and although we do not want to attribute this to the fall in the Nasdaq, there remains no question that the US tech industry is being forcibly excluded from their largest market.

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