U.S. President Joe Biden is expected to shortly sign into law the Chips+ bill, aimed at increasing the competitiveness of the U.S. microchip industry, alleviating dependency on Greater China and the shortage of microchips felt globally.
As fears of a confrontation with China are heightening, negotiations that had lasted more than a year finally came to fruition for the bill.
The cost of the bill is expected to come in at around $280 billion.
This includes a key provision of around $52 billion that will go directly to U.S. chipmakers over the next five years for the expansion of their facilities as well as for research and development.
For now, Mainland China, Hong Kong and Taiwan remain dominant players in global microchip production, which also allows them to control half of the worldwide export market.
Numbers from the UN Comtrade database show that Greater China’s exports of microchips totaled just under $400 billion in the pandemic year of 2020 – the latest for which full data is available.
The United States exported semiconductors worth around $44 billion the same year, much less but still the 7th-highest in the world in a market that is dominated by Asia.
In 2021, exports out of Greater China rose again to approximately $522 billion, while those out of the U.S. were up to around $53 billion.
As recently as 1990, the U.S. had still produced almost 40% of semiconductors globally, with Europe responsible for roughly an equal amount.
The growth of cheaper production facilities in Asia, however, created a trend that changed the usual origin of semiconductors fast.
By the year 2000, the U.S. and Europe together contributed only slightly more than 40% to global chip manufacturing, with Japan, South Korea and Taiwan taking up most of the rest.
By 2020, Mainland China was expected to having expanded to as much as a quarter of global production, taking away market shares from competitors in the U.S., Europe and Asia all at the same time.
As supply chain disruptions caused microchip shortages during the Covid-19 pandemic, several countries started initiatives to boost production of the critical asset at home.
Before the U.S., Japan and the EU had already announced actions to produce more semiconductors domestically.
China-Africa Trade Hits Record High in 2021
China’s customs agency reported that trade with Africa reached record highs in 2021.
The chart below illustrates, while trade between the two markets has been steadily increasing for years, it saw a jump in 2021 with combined imports and exports hitting $254 billion – up 35% from the year prior.
It would appear most of the growth is due to the rise of China’s exports to the continent – throughout the pandemic, including PPE, masks, hazmat suits and pharmaceuticals.
Africa too has upped its game in terms of trade, with exports from Libya and Benin rising 4x.
African exports – mainly natural resources and agricultural products – from Sierra Leone, Burkina Faso, Togo, São Tomé, Príncipe, Madagascar, and Eswatini also increased.
The general trend continued into Q2 2022, with bilateral trade having risen a further 23%.
In addition to being Africa’s largest trading partner, China has also been a leading foreign investor in Africa in recent years.
China was the source of 25% of infrastructure funding on the African continent in 2018 – that was the second highest share that year and only second to the financial commitments from other national African governments.
Ties between Africa and China are clearly growing.
Where Food Imports are Affected by the Ukraine Crisis
A first grain freighter left the Ukrainian port of Odessa on Monday after crucial food exports out of the country had stalled for months due to the Russian war in the country.
Since it is major exporter of grain and sunflower products, Ukraine’s contribution has been sorely missed in world markets where sky-high prices and delivery bottlenecks have stoked fears of economic recession and even famine in some parts of the world.
But missing Ukrainian goods are just the tip of the iceberg when it comes to global food markets plunging into disarray.
As a result of the crisis, several countries including Russia have in turn stopped the export of some food and fertilizer products to protect their own supply, causing a wider ripple effect for global food supply.
According to the Food & Fertilizer Export Restrictions Tracker by the International Food Policy Research Institute, 20 countries in the world are currently banning the export of 30 food products, while another 6 have placed heavy restrictions on certain exports.
The effects are felt most in poorer countries – many in Africa and the Middle East – which are typically those that depend on food imports.
Northern African countries and nations on the Caucasus also suffer from urgent food import insecurity as many had been dependent on Russian and Ukrainian grain.
Some countries – for example India, Iran or Turkey – can be found on both ends of the equation, restricting exports while being affected by exports ban elsewhere as well.