What if the best leverage over a rising China isn’t a ban, but a leash? Washington’s moves to wall off China from American technology may feel decisive, but strategy rooted in exclusion rarely endures. The United States holds greater power when Beijing remains tethered to American innovation — dependent, constrained, and engaged — than when it is forced into self-sufficiency.
Chinese firms have been largely reliant on U.S. chips, software, and precision manufacturing tools. This dependency has created openings: export licenses could be granted or denied, regulations tightened or relaxed, and market access expanded or restricted. Each has been a lever for influencing not simply China’s relationship with America, but its behavior globally. But once Beijing develops fully domestic alternatives, this leverage evaporates.
The Biden administration’s 2022 semiconductor export controls were intended to slow the PRC’s advances in artificial intelligence and supercomputing. Instead, they accelerated them. Deprived of access to U.S. chips, Chinese entrepreneurs — backed by state enterprises — mobilized to establish a native semiconductor industry. Beijing now requires that new data centers use domestically-manufactured AI chips, effectively banning those produced by U.S. companies.
The broader lesson goes beyond technology. The U.S. dollar’s dominance as the world’s reserve currency has long offered a template for sustaining influence through dependence. Roughly 58 percent of disclosed foreign reserves and about 60 percent of cross-border SWIFT transactions remain dollar-denominated — down from roughly 71 percent in 1999, but still a commanding share. The dollar’s reach gives Washington exceptional leverage, from sanctions to liquidity provision. But that leverage is slipping as Beijing pushes yuan-based trade deals, stockpiles gold, and cuts currency-swap agreements from Asia to Africa to the Middle East.
The same dynamic now plays out in the technological arena. America’s “chip dollar” — its dominance in semiconductors, AI architecture, and advanced design — functions as a strategic currency of its own. So long as China and the world rely on U.S. technology, Washington can exercise influence through access and standards. But once that dependency dissolves, the leverage goes with it.
For decades, making competitors reliant on U.S. systems proved a winning strategy. It kept adversaries dependent, allies interoperable, and markets integrated within a framework of American norms. But that advantage is narrowing. China’s rise has eroded U.S. centrality, not only in manufacturing but in setting the terms of global innovation.
The real race isn’t for today’s chips — it’s for tomorrow’s breakthroughs. Quantum computing. Advanced materials. Biotechnology. Washington needs massive investment in these domains. As for existing tech sectors, selective connection beats total separation. The U.S. must stay engaged enough to maintain leverage, while staying guarded enough to protect what matters. No illusions, but no isolation either. The alternative — a full decoupling — will only accelerate the very independence we seek to prevent.
U.S. authorities would therefore be sensible to reject the false binary between full access and total embargo. Licensing can be selective. Partnerships can come with conditions. Restrictions can target specific risks. A nuanced approach will ensure that China remains reliant on American technology, whereas shutting the door will only accelerate what we hope to prevent — complete Chinese self-sufficiency. Worse, we will lose the ability to monitor or influence what they’re developing. Engagement with guardrails isn’t weakness; it’s statecraft.
Technology policy is not an economic sidebar but an instrument of statecraft. Access to chips function much like access to dollar-denominated payment systems: both can compel behavior, reward cooperation, and punish aggression. Maintaining these levers requires that others remain connected to, not cut off from, the United States.
The Trump administration and Congress must therefore refine their approach by preserving export controls where security demands it, but also avoiding sweeping restrictions that push competitors into self-sufficiency. Building redundancy with allies, incentivizing trusted partnerships, and shaping global technology standards rather than retreating from them will help America remain an indispensable hub and the system through which others must pass.
In a world defined by strategic competition, leverage is power. The smartest path forward is not isolation, but influence — the kind that only endures when others rely on you.
