Asian markets broadly declined on Friday following reports the Biden administration is considering new restrictions on Chinese technology firms, potentially escalating trade tensions between the world’s two largest economies. The move, aimed at preventing China from acquiring advanced semiconductors and chipmaking tools, sent ripples through regional stock exchanges and stoked concerns about global economic growth.
The potential curbs build on existing restrictions and could substantially impact China’s technological advancement, affecting industries from artificial intelligence to electric vehicles. Investors are bracing for further retaliatory measures from Beijing, raising the specter of a renewed trade war that could disrupt supply chains, increase costs for businesses, and dampen consumer spending worldwide. The developments come as economic data from both the U.S. and china present a mixed picture, adding to market uncertainty.
Japan’s Nikkei 225 closed down 0.54%, while South Korea’s Kospi fell 1.44%. hong Kong’s Hang Seng Index shed 1.94% and the Shanghai Composite lost 0.76%. Taiwan’s benchmark index dropped 1.24%.The declines followed a negative session on wall Street, where the Nasdaq Composite fell 1.73% and the S&P 500 declined 0.85% on Thursday.
According to a report by the Wall Street Journal, the U.S. Commerce Department is preparing to unveil new rules that would close loopholes allowing companies like Huawei Technologies to access restricted technologies through third parties.The proposed restrictions would require companies selling advanced chips to China to obtain licenses, effectively tightening the existing export controls.
“This is a clear escalation in the tech war,” said Alicia Garcia Herrero, Chief Economist for Asia Pacific at Natixis. “The U.S. is signaling it’s willing to take more aggressive steps to slow China’s technological progress, even if it means disrupting global trade.”
the potential impact extends beyond technology companies. Analysts warn that restrictions on semiconductors could hinder China’s manufacturing sector, impacting global supply chains already strained by geopolitical tensions and the lingering effects of the COVID-19 pandemic. The U.S.government views limiting China’s access to advanced technology as crucial for national security, fearing it could be used to enhance its military capabilities.
