New move related to chip and other technologies amounts to economic coercion, China says

Beijing has resolutely opposed Washington’s “single-minded rollout of restrictions” on investments in China, with the Ministry of Foreign Affairs lodging serious démarche to the United States in this regard.

The Ministry of Commerce said the nation reserves the right to take measures in response to US President Joe Biden signing an executive order on Aug 9 that will block and regulate high-tech US-based investments going toward China.

Biden’s order authorizes the US treasury secretary to prohibit or restrict US investments in Chinese entities in three sectors: semiconductors and microelectronics, quantum information technologies and certain artificial intelligence systems.

The US move amounts to naked economic coercion and hegemonic bullying which violates basic principles of market economy and fair competition, China’s Foreign Ministry said, urging the US to fulfil Biden’s promise of avoiding decoupling from China or obstruct China’s economic development.

“We hope that the US side respects the laws of the market economy and the principle of fair competition, and refrain from artificially impeding global economic and trade exchanges and cooperation, and from setting obstacles for the recovery and growth of world economy,” the Ministry of Commerce said.

Liu Pengyu, a spokesperson of the Chinese embassy in Washington, told the media: “The latest investment restrictions will seriously undermine the interests of Chinese and American companies and investors, hinder the normal business cooperation between the two countries and lower the confidence of the international community in the US business environment.” 

American industry leaders are expressing concerns that restricting the sale of semiconductors to China could be detrimental to the US.

“Without orders from Chinese customers, there will be much less need to go ahead with projects such as Intel’s planned factory complex in Ohio,” Intel CEO Pat Gelsinger told US national security adviser Jake Sullivan, Secretary of State Antony Blinken and other officials during meetings in Washington, Bloomberg reported last month, citing sources familiar with the matter.

In 2022, Intel announced plans to build a $20 billion manufacturing operation on the outskirts of Columbus, Ohio, which the company expects to be one of the world’s largest chipmaking sites. 

On July 17, Gelsinger, along with Jensen Huang from Nvidia and Cristiano Amon from Qualcomm, advised the Biden administration that the administration should not only assess the effects of restricting exports to China but also consider a pause before enacting any new measures. 

In 2021, China was the largest contributor to Intel’s annual revenue, at 36 percent.

As Chinese orders contribute significant revenue that fuels chip firms’ research and development efforts, export controls could endanger Biden’s policy of reshoring chip production to the US, Bloomberg noted.

More than 60 percent of Qualcomm’s revenue comes from the China region through the supply of components to smartphone manufacturers like Xiaomi Corp.

Chip-equipment makers such as Applied Materials have already experienced major reduction in revenue.

The Semiconductor Industry Association said in a statement in July that “unilateral” restrictions on semiconductors “risk diminishing the US semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China”. 

Contact the writers at minluzhang@chinadailyusa.com