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Biden met Dutch leader about restricting China's access to cutting edge micro chips

ARI SHAPIRO, HOST:

Chinese leader Xi Jinping often talks about the opportunities ahead for his country in the face of what he calls changes unseen in a century. Well, sometimes those changes create challenges for him, too.

AILSA CHANG, HOST:

Within the last 24 hours, three pieces of news left many to wonder what's next for the world's second-largest economy. Overnight, Beijing reported its population had declined for the first time in six decades. We'll hear more about that in a few moments.

SHAPIRO: This morning, it confirmed its economic performance last year was among the weakest in the country's modern history.

CHANG: And today President Biden has been meeting with the visiting Dutch prime minister in what analysts say is an intensifying effort to limit China's access to sophisticated technology from the Netherlands, as NPR's John Ruwitch reports.

SHAPIRO: At the center of it all is the Netherlands' biggest company. It's called ASML. This promo video gives a sense of what it does.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED PERSON #1: What's the one thing the world should know about ASML?

UNIDENTIFIED PERSON #2: We create the future.

UNIDENTIFIED PERSON #3: ASML make machine that makes chips.

UNIDENTIFIED PERSON #4: There is a footprint of ASML in your life.

JOHN RUWITCH, BYLINE: ASML makes the world's most advanced lithography machines. Those are the devices that create cutting-edge microchips with transistors that are one-ten thousandth the width of a piece of hair or even smaller. The Biden administration doesn't want Beijing getting its hands on the best microchips out of concern they'll give China's military an edge. And in the fall, the administration introduced sweeping new rules restricting American entities from exporting to China those chips and the gear that makes them.

RISTO PUHAKKA: The U.S. government very much would like to get the European - in this case, especially Dutch counterparts - to join the export controls.

RUWITCH: Risto Puhakka is with the company TechInsights, which does semiconductor market analysis.

PUHAKKA: And that's been kind of the main objective here and is the cause of the friction.

RUWITCH: Friction because the Dutch have been resistant. Their threat perception of China is different from that of the U.S., he says. And the market's a big one for ASML, even though it already withholds its best technology from China.

PUHAKKA: Let me put it this way. Right now ASML ships more machines to China than the United States. So why would you stop doing business in China?

RUWITCH: That could be a problem for the Biden administration, says Graham Webster, a research scholar at the Stanford Cyber Policy Center. The administration says it isn't pushing allies, but Webster says the effort only really works if all key players are on board.

GRAHAM WEBSTER: And if there's some leakage and if other key countries, specifically Japan, the Netherlands or Taiwan, are willing to play with China, this gives China the ability to create an alternative supply chain that's independent of the United States.

RUWITCH: Meanwhile, Beijing is doing its own lobbying. In November, Chinese leader Xi Jinping met Dutch Prime Minister Rutte and told him attempts to politicize economic and trade issues must be rejected. John Ruwitch, NPR News. Transcript provided by NPR, Copyright NPR.

John Ruwitch is a correspondent with NPR's international desk. He covers Chinese affairs.