China files WTO suit against US over chip export controls, saying policy is ‘trade protectionism’
- Beijing’s complaint filed with dispute-settlement body accuses Washington of overstretching ‘notion of national security’ and hindering normal trade
- Move comes as US seeks allies’ backing of restrictions and as Taiwanese chips giant deepens investment in Arizona
Beijing has taken formal action to challenge new US restrictions on semiconductors and other hi-tech exports to Chinese companies by filing a suit at the World Trade Organization, as Washington presses ahead with efforts to remove China from the international technology supply chain.
Beijing filed its complaint with the WTO’s dispute-settlement body on Monday, according to a statement issued by China’s Ministry of Commerce on December 12. The ministry accused the US of taking “a typical practice of trade protectionism” in curbing the export of chip products to China on security grounds.
“In recent years, the US side has continuously overstretched the notion of national security, abused export control measures, [and] hindered the normal international trade of chips and other products,” the statement read. TSMC’s latest project in Arizona follows major customers urging the Taiwanese chip maker to build more advanced semiconductors in the US. Photo: Bloomberg
“[That] threatened the stability of global supply chains and industrial chains, undermined the international economic and trade order, violated international economic and trade rules, defied basic economic laws, and harmed the interests of global peace and development.” Beijing’s strong criticism came as the world’s two largest economies remained locked in a fierce technology war.
The US Commerce Department’s Bureau of Industry and Security in October updated restrictions to China’s ability to acquire high-end US chip technology, equipment and even talent in a 139-page document. Observers have described the new rules as the modern-day equivalent of the Soviet Union’s withdrawal of technical support for Mao Zedong’s efforts to build the atomic bomb. One analyst believed many Chinese chip firms would be “destroyed, damaged, or circumscribed” by the American export controls.
About a week after the latest restrictions, Chinese President Xi Jinping, speaking at the 20th National Congress of the Communist Party of China, said the country must keep pursuing self-reliance in key technologies. Qin Gang, Beijing’s ambassador to Washington, said the US had made outcompeting China the purpose for all its China policies, making economic issues “politicised and weaponised”. He said more than 1,000 Chinese companies had been added to various lists for American export controls and sanctions.
“Some people argue for ‘competing responsibly’,” Qin said last week. “But do such behaviours have anything to do with competing responsibly?” Since the Biden administration’s announcement of unilateral chip export controls, it has been argued that Washington’s success depends on a unified stance from its key allies, including advanced chip tool makers Japan and the Netherlands.
Whether Washington in its chips war with Beijing was sacrificing its allies’ interests for its own geopolitical goals has been a point of contention, raising speculation as to which of its major partners would follow through. Still, Japan and the Netherlands have agreed in principle to join the US in tightening controls over the export of advanced chipmaking machinery to China, Bloomberg reported on Monday, citing people familiar with the matter.
And last week, Taiwan Semiconductor Manufacturing Company – the world’s leading producer of advanced computer chips – announced an expanded US$40 billion investment at its US production hub in Arizona. The US was having a “robust” dialogue with its allies on chip export controls against China and an outcome was on “standby”, said Alan Estevez, the US Commerce Department’s industry and security undersecretary.
Estevez said the latest controls were meant to stop China from being able to build high-end chips and that US allies understood Washington’s rationale. “We’re still working through what that means for them … They are allies, they do share our values and our threats here,” he said last week at a forum held by the Centre for Strategic and International Studies.
The Chinese commerce ministry said taking the dispute to the WTO was “necessary” to safeguard the country’s legitimate rights and interests. “We hope that the US side will give up zero-sum game thinking, correct its wrong practices in a timely manner, stop disrupting the trade of hi-tech products such as chips, [and] maintain normal economic and trade exchanges between China and the US,” it said in its statement.
China’s request marks the first step in the WTO’s lengthy dispute-settlement process. The US will have 60 days to enter into consultations. If consultations fail, Beijing can ask for the establishment of a WTO panel, which can take up to 45 days to be appointed and six months for the panel to conclude.