China Says THANK YOU for US Export Bans

For several years the US has been trying to slow down China’s competition with us by banning the export of US technology like high end chips and chip making equipment.

It actually had the exact opposite effect.

Chinese companies found a gap left by the US bans and used that to develop homegrown solutions.

Morgan Stanley found a shift in companies reaching China’s public markets. Note that this ONLY gives us visibility to publicly traded companies on the Shanghai stock market, so this probably significantly underestimates the effects of the ban.

In 2022, one in ten IPOs were in the categories of products and services that the bans covered.

By 2026, it was one in five. That means that in just four years of the bans, the number of native Chinese companies addressing areas of foreign tech dependence has more than doubled.

Ultimately, what this means that the bans made China much less dependent on us and much more self reliant.

This also means billions of dollars of lost revenue to US companies – REVENUE THAT WILL NEVER BE RECOVERED BECAUSE NOW THEY HAVE A CHINESE ALTERNATIVE.

Of course, these new Chinese companies will be competing with US tech companies on the world stage, ultimately costing US companies even more billions in lost sales.

Was the tech export ban a stupid idea? Probably not. There were certainly limited options. Was it an effective idea? It does not seem so. In fact, it seems, it had the opposite effect from what was intended. Did it hurt US companies? Absolutely. Will US companies ever get those lost worldwide sales back? Probably not.

Sometimes there are no easy answers. Credit: Tech Radar

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