US claws at China's chip industry fanning flames on tech confrontation. Cartoon: Carlos Latuff

 
The Chinese Ministry of Commerce (MOFCOM) on Monday blasted the US' announcement of a so-called Section 301 investigation into the Chinese semiconductor industry, urging the US to stop the wrongdoing and vowing to firmly defend China's rights and interests. 

US Trade Representative (USTR) Katherine Tai on Monday announced the initiation of a Section 301 investigation on "China's acts, policies, and practices related to targeting of the semiconductor industry for dominance," according to a press release. 

In response to the USTR's announcement, a spokesperson for the MOFCOM said in a statement on Monday night that China is strongly dissatisfied with and firmly opposes this, noting that the US' Section 301 investigations carry obvious unilateral and protectionist tendencies. 

The previous Section 301 tariffs have been ruled to violate WTO rules and were opposed by many WTO members, and China has lodged stern representations with the US multiple times, the spokesperson said.  

The US has initiated a new Section 301 investigation into China's chip industry policies, aiming to suppress China and for domestic political reasons. This will disrupt and distort the global semiconductor industry and supply chains and will also harm the interests of American businesses and consumers. It is repeating mistakes, the spokesperson said.  

The spokesperson also pointed out that the US' CHIPS and Science Act offered huge subsidies and US companies account for nearly half of the global chip market, and yet it accuses China of so-called non-market practices, and hypes China's industry threat. 

"This is obviously self-contradictory and completely baseless," the spokesperson said, adding that the US Commerce Department's recent report on foundational chips showed that Chinese chips only account for 1.3 percent of the US market and Chinese chip exports are far less than imports from the US. 

"China urges the US to respect facts and multilateral rules and immediately stop its wrong practices. China will pay close attention to the progress of the investigation and will take all necessary measures to resolutely defend its rights and interests," the spokesperson said.

Also on Monday, the US White House announced several actions against what it claims are "China's unfair trade practices" in the semiconductor sector, including launching a so-called Section 301 investigation into Chinese foundational semiconductors.

The so-called Section 301 investigation could result in more tariffs on semiconductors from China, which are used in a wide range of goods from autos to washing machines to telecom gears, Reuters reported. However, the probe will be handed over to the administration of US President-elect Donald Trump for completion, according to Reuters. 

The move represents another escalation in the US' relentless crackdown campaign against China's semiconductor industry, but it also underscores that the US' crackdown measures have failed and will fail to stop the development of China's chip industry, according to He Weiwen, senior fellow of the Center for China and Globalization.

"Over the past several years, the US has tried all types of restrictions against Chinese chips. Not only did the US moves fail to contain China's chip industry, China chip industry has grown exponentially in recent years," He told the Global Times on Monday. "And so it wants to restrict both sales of advanced chips to China and China's chip exports."

China's semiconductor exports have seen remarkable growth despite the US restrictions. In the first 11 months of 2024, semiconductor exports reached 1.03 trillion yuan ($141.11 billion), representing a 20.3 percent year-on-year increase, according to data released by the General Administration of Customs on December 10.

A "Fact Sheet" posted on the White House website on Monday accused China of engaging in "non-market policies and practices, as well as industrial targeting, of the semiconductor industry," which it claims enables Chinese firms to significantly harm competition and create dangerous supply chain dependencies in foundational semiconductors.

However, He said that the US claims are without any basis in terms of international trade rules. "Whether or not China engaged in non-market policies and practices should be based on WTO rules, not the US' own rules," the expert said, adding that more crackdown measures will not succeed in holding back China's chip industry.

Notably, the White House announcement came just one day after the Wall Street Journal reported on Sunday that Commerce Secretary Gina Raimondo said holding back China in the chips race is a "fool's errand" and efforts to restrict China's access to technology have not held back the country's progress, adding that federal funding for domestic innovation is what will keep the US ahead of China.

Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, said that the US' crackdown measures have posed challenges for certain companies, but in general, the rising demand for domestically made chips also boosted production.

"In the short term, the crackdown moves pose challenges in some areas such as advanced chips, but growing application of domestic chips also boosted development of the domestic industry," Zhou told the Global Times on Monday.

The US' ever intensifying crackdown campaign against Chinese chip firms has drawn swift and firm responses from Chinese officials and industries.

Earlier this month, after the US government added 136 Chinese firms to its so-called Entity List, in a move to tighten restrictions on exports of chipmaking equipment and memory chips, China's Commerce Ministry slammed the move as typical economic coercion and a non-market practice and vowed to take necessary measures to firmly defend its legitimate rights and interests.

In addition, four Chinese industry associations, including the China Semiconductor Industry Association (CSIA) and the Internet Society of China, issued firmly worded statements declaring that US chip products are no longer safe and reliable.

In an interview with the Global Times, Wei Shaojun, vice chairman of the CSIA, said that "suppression will not stop us from development. Chinese industries will become stronger and more confident in our development."