"Chip wars": China denounces US protectionist policy at the WTO
China is betting on the global economy and the United States on protectionism. The race for semiconductor production is sharpening the strategies of the two powers, and China is moving another piece on the chessboard. Beijing has filed a complaint against Washington at the World Trade Organisation (WTO) over the White House's latest protectionist measure that places restrictions on exports by US chipmakers. According to the Beijing regime, this policy "hinders international semiconductor trade" and "threatens the stability of global industrial chains".
The US decision taken in October prevents its companies from selling domestically manufactured technology components to China, including the threat of sanctions for companies that do so. With firm steps, the US authorities have responded to Beijing's complaint at the WTO. "As we have already communicated to China, these specific measures relate to national security, and the WTO is not the appropriate forum to discuss national security issues", said Adam Hodge, spokesman for the Office of the US Trade Representative.
For China, however, the move is "politically motivated" and an "unreasonable crackdown" on companies. This is not far from the truth. In the Security Strategy document presented by the Biden Administration, it warned of the US position vis-à-vis other powers: Russia is the immediate enemy, but China is the real threat.
Washington's protectionist measure is structured under this premise: not to lag behind in the development of technology and production of strategic semiconductors within its borders, and to face Chinese competition. A trade war that Trump has already started in 2018.
However, the Democrats' scope for action is limited. First, because of Xi Jinping's government's support for semiconductor technology. China has just allocated a $143 billion package of direct aid to the industry in order to mitigate the impact of US policy. Secondly, the fact that the most advanced photolithography equipment in chip factories is not in the United States. Intel and Samsung, the world's largest chip producers, are Dutch and Japanese.
The flip side of the coin of having chips manufactured in the Netherlands and Japan is that their components are of US origin, a trump card that the White House is not going to let slip through its fingers. However, these two countries appear to have contradictory interests: either continue trading with China or abide by the policy of their US ally.
In addition to its protectionist policy, Washington is pressuring Europe and Japan to get their microprocessor manufacturers to support its veto on China with the reward of direct transfers from the United States to these manufacturers. This is something that the European Union has already deemed to be contrary to and illegitimate of free competition, a fundamental pillar of what was constituted as the European Economic Community.
For the time being, the Dutch government has already warned its chipmakers that market conditions will be tightened in the coming months, while Japan already seems predisposed to adhere to the sanctions.
If geopolitical tension with Taiwan was already high before the trade war began, it is even higher when considering that the archipelago accounts for more than 60% of the world's microchip production, with its leading company TSMC.
Both Taiwan, with the one-China principle, and the development of semiconductor technology were the main themes of the 20th Congress of the Chinese Communist Party. A strategy that Beijing claims guarantees stability and peace seems to clash with US plans. Nancy Pelosi's visit to the island and the US's protectionist policy are yet another test in the so-called "chip war".
Americas Coordinator: José Antonio Sierra.
