Mending relations: US special body says trade restrictions on China don’t work following Biden-Xi meet

Chinese companies are reportedly taking advantage of loopholes in Washington’s export controls to continue purchasing US chip-making equipment, as revealed by the US-China Economic and Security Review Commission (USCC). Despite the US implementing restrictions on advanced computing chips used for artificial intelligence and chip-making equipment in 2022, aiming to hinder China’s ability to develop advanced semiconductors, the USCC’s annual report indicates that Chinese imports of American chips and chip-making equipment reached approximately $3.1 billion in the first eight months of 2023. While the restrictions led to a 50 per cent decrease in US semiconductor exports to China since the previous year, the report suggests that some of the exported equipment may include advanced technologies banned for sale. Importers often claim the equipment is used on older production lines, making it challenging to verify that it is not being used for producing more advanced chips, especially given the limited capacity for end-use inspections. The report further reveals that China, faced with US curbs, has increased purchases of advanced chip-making tools from other countries, primarily Japan and the Netherlands, both of which introduced their own export restrictions earlier in the year. For instance, China imported $3.2 billion worth of semiconductor manufacturing equipment from the Netherlands between January and August 2023, indicating a 96.1 per cent annual increase. Despite the curbs, China has seemingly continued technological advancements, with Huawei launching its Mate 60 Pro smartphone in September 2023, equipped with high-end 7-nanometer chips. Some industry experts raise questions about whether China produced these chips using older tools not subjected to export controls. The USCC warns that these advancements in Chinese technology raise concerns about the effectiveness of current export control measures, emphasizing that these restrictions are intended to maintain a technological lead over China. China has criticized US export curbs, asserting that they violate globally recognized market rules. The ongoing manoeuvring between nations in the tech and semiconductor industry remains a focal point of global economic and geopolitical dynamics. (With input from agencies)