China says US chips and science law will disrupt international trade and distort global semiconductor supply chains

China on Wednesday criticized a U.S. law aimed at encouraging U.S. production of processor chips and reducing dependence on Asian suppliers as a threat to trade and an attack on Chinese companies. The law signed this week by President Joe Biden promises $52 billion (about Rs. 4,11,300 crore) in subsidies and other aid to investors in US chip factories. It responds in part to warnings that supplies could be disrupted if China attacks Taiwan, which produces up to 90% of high-end chips. China’s ruling Communist Party claims the self-governing island as part of its territory.

The measure “will disrupt international trade and distort global semiconductor supply chains,” Foreign Ministry spokesman Wang Wenbin said. “China strongly opposes it.”

Parts of the law “restrict normal investment and economic and commercial activities of enterprises in China,” Wang said, without giving details.

The disruption in chip supply following the coronavirus pandemic has hampered production of goods from smartphones to automobiles and underscored the global reliance on Taiwanese chips and the Chinese factories that assemble most electronic devices.

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 last week launched military exercises around the island in retaliation for a visit by Speaker Nancy Pelosi of the United States House of Representatives. China believes visits by US officials to Taiwan could encourage its leaders to make its de facto independence permanent, a step the mainland says would lead to war.

The CHIPS and Science Act provides for research expenditures that would total around $200 billion (about Rs. 15,81,900 crore) over 10 years, according to the Congressional Budget Office.

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


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