Crypto News: Supply Lines: US-China retaliation risks

Maybe it's time for both countries to take a breather.

US Senator Jim Risch, the top Republican on the Foreign Relations Committee, warned that retaliation by Washington for China's curbs on Micron Technology would send both countries down a "slippery slope" of escalation with no clear end in sight.

"Retaliation is not a good strategy going forward," Risch said in an interview. "Because generally what it does is it simply escalates to the point where it gets totally out of control."

Key US-China News:

Risch, who represents Idaho, where Micron is based, said the US could respond but that retaliation for retaliation's sake is "not a good strategy going forward."

He said that after his staff spoke with Micron, it became clear that the advisory issued by China's Commerce Ministry would likely only affect a small portion of the company's business in the country.

The Micron Technology automotive chip plant in Manassas, Va. Photographer: Steve Helber/AP

"Micron's not being kicked out of China," Risch said. "The fact of the matter is what China has said is that they're not going to use Micron semiconductors in any of their military grade uses. That's a part of Micron's business in China but it certainly doesn't affect a lot of their business in China."

"I would consider it more of an irritant than an existential problem there," he said.

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Gerard DiPippo, a senior fellow at the Center for Strategic and International Studies, agrees.

"I don't think it makes a lot of sense for the US to punch back on this," said DiPippo, who worked for more than a decade in US intelligence. "I would just let this one blow over."

The Biden White House is trying to create a "mini thaw" in the relations between the US and China, which reached a new low after a Chinese spy balloon was spotted in the skies over Montana, and hitting back too soon without a clear rationale would only complicate efforts to have senior officials from both countries meet to discuss shared interests in the coming months.

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"I still suspect that we're going to do more export controls at some point," DiPippo said. "I would be surprised if they drop soon for administrative and diplomatic reasons. The smoke has not yet cleared off the battlefield but now we can probably get a truce – to last maybe through November – but then I think it's back on."

As for the broader discussion about the US de-coupling its economy from China's, Risch doesn't see that happening.

"De-risking, number one, is imperative," he said. "De-coupling, I think is impossible. I think even if you wanted to do that, because of the size of China and their ability to do the kinds of things that they do, I think de-coupling is impossible."

—Daniel Flatley in Washington

Still Undecided | Italian Prime Minister Giorgia Meloni has yet to make a final decision on Italy's controversial role in China's Belt and Road program after she initially signaled her intention to pull out from the investment pact. Italy can have "good relations" with China "even in important areas of interest with Beijing without necessarily being part of an overall strategic plan," Meloni said in an interview with Italian daily Il Messaggero on Sunday. (Read the full story here.)

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