China criticizes US chip law as a threat to trade

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Beijing– China on Wednesday criticized a US law to encourage processor chip production in the United States and reduce reliance on Asian suppliers as a trade threat and an attack on Chinese trade.

Law signed this week by President Joe Biden promises $52 billion in grants and other aid to investors in US chip factories. This partly responds to warnings that supply may be interrupted if China attack Taiwan, which produces up to 90% of high-end chips. The ruling Communist Party of China claims the self-governing island as part of its territory.

Foreign Ministry spokesman Wang Wenbin said the measure would “disrupt international trade and distort global semiconductor supply chains.” “China strongly opposes this.”

Parts of the law “restrict the general investment and economic and business activities of companies in China,” Wang said without giving details.

Chip supply disruptions following the coronavirus pandemic have disrupted the production of goods from smartphones to autos and exposed the world’s dependence on Taiwanese chips and the Chinese factories that assemble most of the electronic components.

Fears of disruption have been heightened by Chinese threats to attack Taiwan, which broke away from the mainland in 1949 after a civil war.

Beijing launched military drills around the island last week in retaliation for the visit of US House of Representatives Speaker Nancy Pelosi. China believes a visit by US officials to Taiwan could encourage its leaders to make their de facto independence permanent, a move that the mainland says will lead to war.

According to the Congressional Budget Office, the “Chips and Science Act” calls for research spending that would be approximately $200 billion over 10 years.

The Communist Party has spent billions of dollars to develop China’s own chip production industry. Its factories make low-end chips for autos and other products but cannot supply high-end smartphones and other devices.

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