Analysts on how outcome might affect tech sector
U.S. President Joe Biden in a virtual meeting with Chinese President Xi Jinping at the White House in November 2021. Just last month, the U.S. announced export controls restricting China’s access to specific types of advanced semiconductor chips, a move that crimps Chinese companies’ access to key tech.
Alex Wong | Getty Images News | Getty Images
The U.S. midterm elections could lead to “disruptive changes” in U.S. tech policies if the Republicans take control of Congress, according to an analyst.
Though both Republican and Democratic candidates are pledging a tough approach on China in a bid to win voters who view China as a threat to national and job security, the Republicans are likely to take a more hawkish stance.
“What the Republicans and Democrats are completely aligned on is a tough approach on China. One area where they are less aligned on is getting multilateral partners to agree [on the stance toward China],” said Martin Chorzempa, senior fellow at Peterson Institute for International Economics, on CNBC’s “Squawk Box Asia” on Wednesday, when asked about how the outcome of the midterm election might affect U.S.-China relations.
“A lot of Republicans think that is a waste of time. They may just want to go with it alone, but then that creates a lot of friction with the U.S. allies and might lead to more dislocative, disruptive changes in the tech policies,” said Chorzempa, who cited “techno-nationalism” as a hot-button issue.
Just last month, the U.S. announced export controls restricting China’s access to specific types of advanced semiconductor chips, a move that crimps Chinese companies’ access to key tech.
Companies will require a license if they use American tools to produce certain advanced computing semiconductors or related manufacturing equipment for sale to China.
One of the big challenges that the tech sector faces is the friction between the U.S. and China, which is “pulling companies in different directions and potentially fracturing the global Internet, multinational firms that want to do business in the U.S. and China,” said Chorzempa.
But semiconductor companies in Taiwan and South Korea may benefit from a Republican congressional sweep, according to research firm Natixis.
“There are a lot of uncertainties on whether there will be a change if the Republicans take the house or both Senate and House,” said Natixis’ senior economist Gary Ng during CNBC’s “Squawk Box Asia” on Wednesday.
“Increasingly, we are seeing this tougher approach from the U.S., especially from the Republicans, with greater scrutiny of supply chain in tech, especially high tech,” said Natixis’ senior economist Gary Ng during CNBC’s “Squawk Box Asia” on Wednesday, adding that the pressure will only continue to grow.
“If there is more restriction on Chinese firms, it means there will be more room for growth for [semiconductor companies in] Taiwan, or increasingly even from Korea and Japan as well,” added Ng.
However, in an interview about the chip export curbs with CNBC’s “Squawk Box Asia” last month, Sarah Kreps of Cornell University said the U.S. should keep the “bigger picture” in mind as it tries to hedge against China, and that it is “putting its East Asian allies at a disadvantage.”