China's Washington envoy warns of retaliation against further curbs imposed on chip sector

China’s ambassador to Washington Xie Feng said that China is not seeking a trade or tech war, but warned of responses if the United States further impose restrictions on its chip sector. Highlighting the existing U.S. prohibitions on Chinese imports of equipment to make advanced chips, Xie while addressing the Aspen Security Forum said that China did not shy away from competition, but the way it was defined by the United States was not fair. “This is like … restricting the other side to wear outdated swimwear in a swimming contest, while you (are) wearing a Speedo,” he said. Xie referred to reports that Washington is considering an outbound investment review mechanism and further prohibition on the export of AI chips to China. “The Chinese government cannot simply sit idly by. A Chinese is saying that we will not … make provocations, but we will not flinch from provocations,” he said. “China, definitely … will make our response. But definitely, it’s not our hope to have a tit-for-tat. We don’t want … a trade war, technological war, we want to say goodbye to the Iron Curtain as well as the Silicon Curtain.” The Biden administration has been finalizing an executive order that would restrict certain investment in sectors including advanced semiconductors, quantum computing and artificial intelligence, and a senior administration official said the aim was to wrap up reviews of it by Labor Day. China targeted U.S. chip maker Micron Technology after Washington imposed a series of export controls on American components and chipmaker tools to ensure that they are not used to advance China’s military capabilities. The Cybersecurity Administration of China said in May that Micron failed its security review and barred operators of key domestic infrastructure from purchasing its products. U.S. Treasury Secretary Janet Yellen said last week at the end of a four-day trip to China she had spoken with Chinese counterparts about the proposed order, and said that any investment curbs would be “highly targeted, and directed, narrowly at a few sectors where we have specific national security concerns.” She said the order would be enacted transparently, through a rule-making process that would allow public input.