Want to understand the Biden administration’s China strategy? Set aside the South China Sea and the Quad. A more useful marker of the administration’s thinking may come from a South Korean company that few in Washington have ever heard of. Magnachip, based in South Korea, produces a type of semiconductor needed in the most advanced screens, such as those for the newest smartphones. It’s a small company, with revenues of around $500 million last year, a tiny fraction of chip industry behemoths like Intel or Taiwan’s TSMC. But the Biden administration is now blocking its purchase by a Chinese private equity fund. The fate of the deal will send a major message about how Washington is thinking about the United States’ economic relationship with China.
Since taking power in January, U.S. President Joe Biden has quietly shelved discussion of “decoupling,” the idea advocated by some aides of former U.S. President Donald Trump of severing economic ties with China. Talk of a trade war with China has been abandoned, too, although Trump’s tariffs remain in place for now. Biden has presided over a deepening of Wall Street’s ties with China, continuing a Trump-era trend. The main new initiative from the Biden administration has been to issue a new report on America’s supply chains, which mentions China but frames the challenge as building resilience, not bashing Beijing.
