Made in the USA

Your Balance of Power newsletter focuses on the US-China battle over advanced semiconductors. [View in browser]( [Bloomberg]( Back in 2015, China announced a program seeking to dominate in several future-oriented areas of industry, from aerospace and electric vehicles to biotechnology. Central to Beijing’s 10-year plan was a focus on the domestic semiconductor industry intended to enable breakthroughs in other fields. That whole strategy has been cast into doubt by the latest US efforts to blunt China’s technological advance. Key reading: - [Japan, Netherlands to Join US in Chip Controls on China]( - [Intel Gives One of Grimmest Forecasts Ever, Slamming Shares]( - [ASML Says Chip Controls Will Push China to Create Own Technology]( - [The Cleantech Arms Race has Begun. Can it Save the Planet?]( - [Why Making Computer Chips Has Become a New Arms Race]( As [Jenny Leonard]( reports, Washington has persuaded Japan and the Netherlands to join it in hindering China’s access to the machines that are needed to make advanced semiconductors. Talks are set to conclude as soon as today. That’s significant since the three countries have a stranglehold on top-end chip-making equipment through companies like ASML Holding, Tokyo Electron and Applied Materials, and their alliance will inevitably set back China’s goals. The agreement is a further escalation of President Joe Biden’s confrontation with Beijing as he asserts US dominance in key high-tech arenas. But it’s not just China that objects. The chip industry, already enduring a slump, is alarmed by the picking apart of intricate global supply chains established over decades as the Biden administration attempts to wall off China, the world’s biggest semiconductor market, while luring chipmakers to the US with carrots and sticks. ASML’s chief warned the US actions will ultimately compel China to develop its own technology. Similarly, Biden’s IRA climate act is fueling concerns in the European Union and lately the UK that clean-tech companies will be drawn to the US for the massive subsidies on offer. Biden will today announce an “Invest in America” cabinet. The Made in China 2025 plan was already in trouble after raising global concerns at Beijing’s attempts to overtake the world on key technologies. Biden’s protectionist equivalent risks becoming an equally big concern. — [Alan Crawford]( A worker inspects the quality of products at a manufacturer of semiconductors in China’s Sichuan province. Source: Future Publishing [Click here]( for this week’s most compelling political images. And if you’re enjoying this newsletter, [sign up here](. Global Headlines Long war | Vladimir Putin is preparing a new Russian [offensive]( in Ukraine as early as February or March, while also steeling his country for a conflict with the US and its allies that he expects to last for years, sources say. The president remains convinced Russia’s larger forces and willingness to accept casualties will allow it to prevail despite the military failings so far. - Follow our rolling coverage of the war [here](. Drawn-out probe | Biden’s hope for a quick resolution of a probe into his [mishandling]( of classified documents have been dashed by a steady drip of new developments. Although it appears to be a relatively straightforward investigation, the case has become politically entangled with separate questions about the handling of classified material by former President Donald Trump and now ex-Vice President Mike Pence. - House Republican leaders are considering proposing a [short-term extension]( of the federal debt ceiling to delay the risk of default until Sept. 30, a source says. The EU is floating a plan to [cap the price]( of Russian diesel at $100 a barrel from Feb. 5 — a level that might help to stave off the very worst effects of a fuel-imports ban that it will impose on Moscow on the same day as punishment for the nation’s invasion of Ukraine. General vs billionaire | Petr Pavel, formerly NATO’s highest-ranking general, is favored to defeat populist billionaire and ex-Prime Minister Andrej Babis in the Czech Republic’s presidential [runoff]( that starts today. The winner will replace Milos Zeman, a divisive figure who antagonized EU allies with support for Russia — until it invaded Ukraine. Best of Bloomberg Opinion - [Biden Has Edge on Xi. That’s Why It’s Time to Talk: Minxin Pei]( - [What Really Worries Indians About Adani’s Empire: Mihir Sharma]( - [Carbon Removal’s Where Green Investment Should Go: Lara Williams]( Fiscal constraints | Chancellor of the Exchequer Jeremy Hunt dismissed [calls for tax cuts]( and for green energy subsidies, warning that “sound money must come first” as he argued that Brexit will drive UK growth. “At the moment, we don’t have the headroom for major cuts,” Hunt said today in an interview on Bloomberg TV. “Businesses want that, who wouldn’t. But what businesses want even more is stability.” Explainers you can use - [How Young Voters Can Shake Up Nigeria’s Next Election]( - [How Giant Saudi Fund Is Building a Post-Oil Future]( - [Burning Trees in the Amazon Melts Snow in the HimalayasÂ]( Irreversible damage | Two new articles published in the peer-reviewed journal Science paint a [bleak picture]( of the state of the Amazon rainforest: The critical ecosystem is being damaged at an unprecedented pace. The region, key to the world’s climate system “is now perched to transition rapidly from a largely forested to a non-forested landscape,” writes one set of authors, “and the changes are happening much too rapidly for Amazonian species, peoples, and ecosystems to respond adaptively.” Bloomberg TV and Radio air Balance of Power with [David Westin]( on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here](. News to Note - The Palestinian Authority said it’s [ending security ties]( with Israel after eight militants and one civilian were killed in a West Bank gunfight, in an escalation in violence that was followed by a rocket attack from the Gaza Strip. - Trump failed to persuade a judge to throw out a [civil lawsuit]( brought by US Capitol police officers over injuries they suffered during the Jan. 6, 2021, riot. - Myanmar’s military government took an [early step]( toward holding parliamentary elections, but it did so by imposing strict rules on political parties that may make fair balloting difficult. - Brazil [plans to punish]( all those involved in the Jan. 8 insurrection against Luiz Inacio Lula da Silva’s government to ensure attacks against its democratic institutions never happen again. - Bilal al-Sudani, an Islamic State leader, was killed in a US [counter-terrorism operation]( in a remote area of northern Somalia, senior administration officials said. Pop quiz (no cheating!) Which country is planning naval exercises with Russia and China next month amid criticism over its noncommital stance on the war in Ukraine? Send your answers to [balancepower@bloomberg.net](bbg://screens/MSG%20balancepower%40bloomberg.net). And finally ... A joint US-German [crackdown]( on Hive ransomeware thwarted $130 million in demands for payment from more than 1,500 victims around the world, according to law enforcement authorities. The FBI penetrated the group’s website starting in July, captured its decryption keys and offered them to victims in 80 countries, which included hospitals, schools, financial firms and critical infrastructure, the US Justice Department said. US officials have accused Moscow of enabling Russian-speaking cybercriminals, an allegation Russia denies. A screenshot of the Hive site taken on Thursday. Bloomberg Follow Us Like getting this newsletter? 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