U.S. sanctions on chip export to China threaten global supply chain

U.S. Commerce Secretary Gina Raimondo's four-day trip to China started August 27, at the invitation of Chinese Commerce Minister Wang Wentao. The visit is deemed as an important step to improving the trade relationship between the two countries.

"Secretary Raimondo looks forward to constructive discussions on issues relating to the U.S.-China commercial relationship, challenges faced by U.S. businesses, and areas for potential cooperation," reads a statement published by the U.S. Department of Commerce.

After China and the U.S. officially agreed to expand flight volumes between the two countries, trade relations continue to ease this week ahead of Raimondo's visit. With the U.S. Department of Commerce removing 27 Chinese entities from its export-control "unverified list", China's Ministry of Commerce said the move is in line with the common interests of the two sides and conducive to normal bilateral trade.

Despite this, the Biden administration is threatening to undermine the two countries' relationship. This month, U.S. President Joe Biden signed an executive order that will prohibit U.S. investment in China regarding sensitive technologies like computer chips. Since last year, the U.S. has implemented a series of measures aimed at limiting the development of the Chinese chip industry.

An Nvidia Corporation sign is shown in Santa Clara, Calif., May 31, 2023. / CFP
An Nvidia Corporation sign is shown in Santa Clara, Calif., May 31, 2023. / CFP

An Nvidia Corporation sign is shown in Santa Clara, Calif., May 31, 2023. / CFP

U.S. actions not only harm global supply chains, but also the revenue of U.S. chipmakers. Nvidia Chief Financial Officer Colette Kress on Wednesday warned that further sanctions on chip export to China will lead the U.S. chip sector to "permanently lose business opportunities" in the world’s largest semiconductor market.

Research presented at the Federal Reserve economic symposium also said that U.S. trade has shifted away from China due to policies enacted by successive administrations, but the U.S. reliance on China-linked supply chains has not necessarily reduced while consumers have faced higher costs, Reuters reported on Saturday.

In August, China issued its first report on U.S. WTO compliance, expressing concerns over U.S. policy measures that undermine the multilateral trading system and disrupt global industrial and supply chains. China urged the U.S. to make its due contribution and promote the multilateral trading system, said the report.

(Cover via CFP)

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