This week, the U.S. House of Representatives finally approved the Chip and Science Act, which would allocate about $52 billion to boost semiconductor manufacturing and research. Biden is expected to sign the legislation next week.
There have been criticisms in the United States that large chip subsidies will only benefit chip companies and fall into the pockets of corporate executives.
U.S. President Joe Biden holds a virtual meeting with business and labor leaders on the Chip Act in Washington.
On July 30, the U.S. Commerce Department said late on Friday that it would limit the scale of government subsidies for semiconductor manufacturing and prevent companies from using funds to “bottom out.”
The Commerce Department told local chip companies on Friday that subsidies would be “no more than the amount generated to ensure that projects operate within the United States,” adding that the department would prevent “competitive subsidies between states and localities.”
The Commerce Department also pledged to prioritize among subsidies companies “committing to invest in the development of the domestic semiconductor industry in the future” over companies that engage in share repurchases. The legislation does not prohibit companies receiving government funding from repurchasing stock, but it prohibits the use of subsidized funds for buybacks.
In addition, the United States has been accusing China of subsidizing companies in the Sino-U.S. trade negotiations, which is an unfair trade practice. Today, the United States is heavily subsidizing the chip industry. It is this unfair trade behavior.
On July 29, the spokesperson of the Ministry of Commerce of China answered a reporter’s question on the passage of the “Chip and Science Act” by the US Congress.
Reporter: Recently, the US will pass the “Chip and Science Act”. There are comments that the bill aims to enhance the US’s advantages in the chip field and compete with China. What is China’s response to this?
A: China has noticed that the US Congress recently passed the “Chip and Science Act”. The bill provides huge subsidies to the domestic chip industry in the United States, which is a typical differentiated industry support policy. Some provisions restrict the normal economic, trade and investment activities of relevant companies in China, which will distort the global semiconductor supply chain and disrupt international trade. China pays great attention to this. The implementation of the US-law bill should comply with the relevant WTO rules and the principles of openness, transparency and non-discrimination, and will help maintain the security and stability of the global industrial chain and supply chain and avoid fragmentation. China will continue to pay attention to the progress and implementation of the Act, and take effective measures to safeguard its legitimate rights and interests when necessary.