Experts have raised concerns that the U.S. policy aimed at preventing technology theft, often referred to as the “small yard, high wall” strategy, may inadvertently encourage China to enhance its semiconductor production capabilities. As the global trade landscape shifts from “globalization” to “economic security,” Scott Kennedy, a senior adviser and board member at the Center for Strategic and International Studies (CSIS), questions whether the U.S. has genuinely improved under this approach or whether it has simply incentivized China to invest more in semiconductors, ultimately allowing China to outperform other nations.
At an international seminar titled “Responding to International Supply Chain Restructuring,” held by the Chung-Hua Institution for Economic Research, scholars from the U.S., Japan, South Korea, Germany, and Taiwan gathered to discuss these issues.
Kennedy emphasized the connection between economic security, secure trade, and the ongoing U.S.-China competition, along with the impact of the pandemic and advancements in digital technology. He noted that significant digitalization requires deep mutual trust among trading partners for effective collaboration.
As the U.S. adopts a dual approach of competition and investment with China, Kennedy expressed uncertainty about the effectiveness of tariffs and import restrictions. He referred to these measures as actions taken within the framework of the “small yard, high wall” strategy and questioned whether they have actually benefited the U.S. or allowed China to gain a competitive edge.
Regarding the current economic security measures taken by the U.S., Kennedy posited that while China may experience short-term slowdowns and Western nations retain advantages in advanced manufacturing processes, these strategies might inadvertently provide incentives for China to ramp up its semiconductor investment, potentially leading to overcapacity in the sector.
Kennedy urged a reevaluation of several critical issues, including redefining economic security and reassessing technological leadership. He also called for a balanced approach moving forward, weighing whether to decouple completely from China or to reduce dependence to a manageable level. He raised concerns about how such decisions could impact broader goals, such as climate change initiatives. Additionally, he mentioned the importance of Taiwan’s role in maintaining active participation in secure trade.
Meanwhile, Chen Tien-Chi, an honorary professor of economics at National Taiwan University, pointed out that while over-reliance on China poses challenges, the nature of that reliance matters. He stated that depending on Chinese labor may not be problematic, but reliance on the Chinese market and technology presents different strategic considerations that require thoughtful responses.
