WTO: China Takes Action Against US Chip Curbs

On Monday, China formally filed a legal "request for consultations" at the World Trade Organization (WTO) against the US over its move to block sales of advanced chips and chip-making equipment without a license to Chinese firms.

WTO: China Takes Action Against US Chip Curbs
Image credit: Getty Images [via CNBC]

Facts

  • On Monday, China formally filed a legal "request for consultations" at the World Trade Organization (WTO) against the US over its move to block sales of advanced chips and chip-making equipment without a license to Chinese firms.
  • Previously, the Biden administration in October announced various chip export control measures. However, China claims the changes obstruct international trade and threaten the stability of the global industrial supply chains.
  • Calling the US measures "a typical practice of trade protectionism," the PRC's commerce ministry accused the US of blocking the country's advancement in the semiconductor industry. The legal action was filed to "defend its legitimate rights and interests," the ministry added.
  • Meanwhile, the US is in dialogue with Japan and the Netherlands to cooperate with its chip-related curbs on China. To counter US moves, China is taking a step towards self-sufficiency and is working on a more than $143B package to support its semiconductor industry.
  • A joint report by the Semiconductor Industry Association and the Boston Consulting Group estimates that the semiconductor industry will double in size to more than $1T by 2030, and China will account for approximately 60% of that growth. Currently, China consumes about 40% of global chip demand each year.

Sources: Straits Times, China Daily, CNN, Reuters, and Investment Monitor.

Narratives

  • Pro-China narrative, as provided by SCMP. The US can only ban the sale of technology or equipment, not the free flow of global tech talent to China, so it will be virtually impossible to contain China’s rise and emergence as a stronger power than the US. If the intention of these export control measures is to make it harder for China to become a global leader in artificial intelligence and semiconductors, it’s bound to backfire.
  • Anti-China narrative, as provided by The Atlantic. The US is having a rational response to heightened geopolitical threats and the role of emerging technologies in advanced weapons systems. It would be foolish to expect the US to continue supplying its own and allied technologies at the cost of national security and help China reach its goal of upgrading its military capabilities. Even if the ban on semiconductor exports to China sets off a slight geopolitical quake, it’s worth it.