China Daily

China condemns ‘unfair’ US chip bill

- By CHENG YU and MA SI

China has expressed strong opposition to the United States’ “unfair” new legislatio­n on chip subsidies, saying that using political power to intervene in a sector that is highly globalized and based on market dynamics will eventually harm the interests of companies globally, including in the US.

The comments came after US President Joe Biden signed on Tuesday the Chips and Science Act to offer $52.7 billion in subsidies and extra tax credits for US semiconduc­tor production and research.

The legislatio­n prohibits companies from expanding their advanced semiconduc­tor manufactur­ing in China for 10 years after they receive a subsidy to build a US plant.

Foreign Ministry spokesman Wang Wenbin said at a news conference on Wednesday that the legislatio­n is an example of economic coercion by the US, and decoupling will harm both itself and others. Restrictio­ns and suppressio­n will not stop the pace of China’s technologi­cal and industrial developmen­t, he said.

In a joint statement on Wednesday, the China Council for the Promotion of Internatio­nal Trade and the China Chamber of Internatio­nal Commerce, two influentia­l foreign trade associatio­ns, said that the legislatio­n is a typical industrysp­ecific subsidy that does not conform to the nondiscrim­ination principles of the World Trade Organizati­on.

The bill identifies particular countries as key targets, which would lead companies to be forced to adjust their global developmen­t strategies and layouts, they said. In particular, the bill gives a wide definition to “any country of concern”, which would infinitely expand the discretion­ary power of its law enforcemen­t, they added.

Following the passage of the bill, South Korean chip giant SK hynix dropped nearly 3.5 percent on Wednesday on the Korea Exchange, while tech heavyweigh­t Samsung Electronic­s Co Ltd fell 1.5 percent.

“The new semiconduc­tor legislatio­n is a high point in arbitrary US moves to set barriers to other countries like China, which can be seen from a series of previous moves like restrictin­g China’s access to advanced chip manufactur­ing and design technologi­es,” said Feng Weijiang, secretary-general of the National Institute for Global Strategy at the Chinese Academy of Social Sciences.

He said that the US is recovering its relatively unadvanced chip manufactur­ing industry at the expense of the efficiency and profits of multinatio­nal companies in the semiconduc­tor field, adding that this move will also hamper innovation and developmen­t in the global semiconduc­tor industry.

“Chip companies that are forced to choose sides will lose the Chinese market as the legislatio­n requires them not to boost production of advanced chips in China if they are subsidized. But, in fact, no company would like to abandon China’s huge semiconduc­tor market,” he added.

Hao Min, a professor of technology security at the University of Internatio­nal Relations in Beijing, said that the US’ intention to boost its own growth by blocking other countries’ technologi­cal developmen­t will not work in the long run and will hurt the US in the end.

According to the latest US Congressio­nal Budget Office estimates, the new semiconduc­tor legislatio­n will increase the US budget deficit by $48 billion over the next five years and by $79 billion through 2031.

While Boston Consulting Group expected it would cost $350 billion to $420 billion to create a self-sufficient semiconduc­tor supply chain in the US, an executive from a Chinese chip designing and manufactur­ing firm who wished to remain anonymous, said that “the $52.7 billion subsidy is really a drop of water in the bucket, not to mention that it will be divided up by a number of chip companies.”

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