China Criticizes U.S. Subsidies and Tax Breaks for Local Chip Industry as Discriminatory

China’s Ministry of Commerce (MOC) has recently expressed concerns over the United States’ approach to its domestic chip industry. The U.S. government has been actively supporting its chip sector with substantial subsidies and tax incentives, a move that, according to the MOC, has led to distortions in the global semiconductor industry.

The MOC spokesperson, He Yadong, pointed out on Thursday that these U.S. policies are not only favoring its local industry but also pressuring companies to shift their focus from China to the United States. Such measures, the MOC argues, are discriminatory and breach market laws as well as international economic and trade regulations. They also disrupt the global semiconductor supply chain, which has evolved into a highly integrated and globalized network over decades.

He Yadong emphasized that the semiconductor sector’s growth has been a result of the combined resource endowments of various countries and market forces. The Chinese approach towards this sector is to maintain a high level of openness and encourage global semiconductor firms to invest in China, thereby contributing to the overall health and development of the international semiconductor industry.

The backdrop to these statements includes recent deliberations by the U.S. Department of Commerce to potentially add several Chinese chip companies, linked to Huawei, to their sanctions list. The MOC’s stance on this is clear: China opposes the politicization and weaponization of economic, trade, and technological matters. The spokesperson criticized the U.S. for its alleged misuse of export controls and unjust sanctions against Chinese enterprises, actions which he claims have severely disrupted global industrial and supply chains.

He Yadong also highlighted that further sanctions on Chinese companies, including ongoing suppression of Huawei based on purported connections, would be considered economic bullying, infringing on international trade norms and damaging the global economic order. While urging the United States to refrain from such practices, he assured that China is prepared to take necessary actions to protect the rights and interests of its businesses. These developments suggest an intensifying debate over the role of national policies in the global semiconductor industry, a sector crucial to numerous facets of modern technology and trade.