China says US moves to limit access to advanced computer chips hurt supply chains, cause huge losses

Beijing has vigorously protested the U.S. Commerce Department's latest update of export controls to prevent exports to China of advanced computer chips and the equipment to make them

Biden Computer Chip Exports (Copyright 2023 The Associated Press. All rights reserved)

China vigorously protested Wednesday the U.S. Commerce Department’s latest update of export controls to prevent exports to China of advanced computer chips and the equipment to make them.

The revisions to the U.S. rules were announced Tuesday, roughly a year after the export controls were first launched to counter the use of the chips for military applications that include the development of hypersonic missiles and artificial intelligence.

China’s Commerce Ministry said the controls were “improper” and urged that Washington lift them as soon as possible.

It said that since the semiconductor industry is highly globalized, the restrictions on chips used for artificial intelligence and other advanced applications were hindering normal trade and economic activities. They violate international trade rules and “seriously threaten the stability of industrial supply chains,” it said according to a transcript of a briefing on the ministry's website.

“U.S. semiconductor companies have suffered huge losses and semiconductor companies in other countries have also been affected,” it said.

The Chinese Commerce Ministry said Beijing would take “all necessary measures” to safeguard its rights and interests, without giving any details.

In a call with reporters, U.S. Commerce Secretary Gina Raimondo said the restrictions are meant to protect technologies with clear national security or human rights implications.”

“The vast majority of semiconductors will remain unrestricted. But when we identify national security or human rights threats, we will act decisively and in concert with our allies,” she said.

The updates stemmed from consulting with industry and conducting technological analyses. There will now be a gray zone that will be monitored for chips that could still be used for military aims even if they might not meet the thresholds for trade limitations.

Chip exports to companies headquartered in Macao or anywhere under a U.S. arms embargo can also be restricted to prevent countries of concern from circumventing the controls and providing chips to China.

The updates also introduce new requirements that make it harder for China to manufacture advanced chips in other countries. The list of manufacturing equipment that falls under the export controls also was expanded, among other changes.

China's leaders view the design and manufacturing of high-level semiconductors as essential for its economic and geopolitical goals. Raimondo has said the limits on these chips are not designed to impair China's economic growth.

In an August meeting, Raimondo and her Chinese counterparts agreed to exchange information about the export controls. But a senior administration official, insisting on anonymity to discuss the policy, said the U.S. government did not discuss with China the parameters of the revised export controls.

Chinese officials are scheduled to attend a summit of the Asia-Pacific Economic Cooperation forum in San Francisco in November.

President Joe Biden has suggested he could meet on the sidelines of the summit with Chinese President Xi Jinping, though a meeting has yet to be confirmed. The two leaders met last year following the Group of 20 summit in Bali, Indonesia, shortly after the export controls were announced.