CHINA’S STRATEGIC RESPONSE TO U. S. DECOUPLING IN THE SEMICONDUCTOR INDUSTRY:A NEOMERCANTILIST PERSPECTIVE

Abstract

This article examines China’s strategic response to U.S. decoupling in the semiconductor industry through the lens of neomercantilism, emphasizing the intersection of economic nationalism and geopolitical rivalry. It argues that the ongoing technology confrontation demontrates how the U.S. and China deploy economic instruments as tools of strategic competition. The study finds that while Trump’s first and second-term decoupling strategies share a foundation in protectionist logic, the second term transformed decoupling into an institutionalized, legal-bureaucratic framework that embedded export controls, investment restrictions, and coalition-based coordination within a broader geoeconomic strategy to preserve U.S. technological supremacy. In response, China has pursued state-driven countermeasures, including the following: export restrictions, retaliatory sanctions, R&D investment, technological self-sufficiency initiatives, sanction circumvention, and global diplomatic outreach. These actions reveal both the strengths and limits of China’s neomercantilist approach—demonstrating success in developing niche technologies and domestic innovation ecosystems, yet being exposed to persistent dependence on foreign inputs in advanced chipmaking. By framing the semiconductor rivalry as a manifestation of neomercantilist statecraft, this article contributes to understanding how economic interdependence is being weaponised, transforming globalisation from a liberal order of mutual gain into a competitive arena of strategic industrial policy and geopolitical control.