China on Wednesday criticized a US law to encourage the production of processor chips in the United States and reduce reliance on Asian suppliers as a threat to trade and an attack on Chinese business. The law signed by President Joe Biden this week promises $52 billion (about Rs. 4,11,300 crore) in grants and other aid to investors in US chip factories. It is partially responding to warnings that supply could be disrupted if China attacks Taiwan, which produces up to 90 percent of high-end chips. China’s ruling Communist Party claims the self-ruled island as part of its territory.
The measure will “disrupt international trade and disrupt global semiconductor supply chains,” said a spokesman for the State Department, Wang Wenbin. “China is resolutely opposed to that.”
Parts of the law “restrict the normal investment and economic and trade activities of companies in China,” Wang said, without giving details.
Disruption in the supply of chips after the coronavirus pandemic hampered the production of goods from smartphones to cars and highlighted the world’s reliance on Taiwanese chips and Chinese factories that assemble most electronic devices.
Fears of disruption have been heightened by Chinese threats to attack Taiwan, which was split from the mainland in 1949 after a civil war.
Beijing launched military exercises around the island last week in retaliation for a visit by US House of Representatives Speaker Nancy Pelosi. China believes visits by US officials to Taiwan could encourage its leaders to make its de facto independence permanent, a move the mainland believes would lead to war.
The “CHIPS and Science Act” calls for research expenditures totaling about $200 billion (about Rs. 15,81,900 crore) over a 10-year period, according to the Congressional Budget Office.
The Communist Party has spent tens of billions of dollars developing China’s own chip manufacturing industry. The factories make low-end chips for cars and other products, but cannot supply high-end smartphones and other devices.