US-China tech war: brace for Beijing retaliation over chip export curbs, lawmaker tells Japanese firms

Shigeharu Aoyama said Japanese companies doing business in China ‘will probably be damaged’, adding they should look for markets elsewhere
His comments come amid reports Japan and the Netherlands are close to joining a US-led effort to restrict exports of chip-making technology to Beijing

Japan

Bloomberg

Published: 9:48am, 27 Jan 2023

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China is “100 per cent sure” to retaliate over Japanese backing for Biden administration restrictions on semiconductor exports, and firms facing the fallout should look for markets elsewhere, a ruling Liberal Democratic Party lawmaker said.

“China will come back with stronger retaliation and Japanese companies doing business there will probably be damaged,” said Shigeharu Aoyama, who serves on the party’s committee covering trade and industry.

He made the comments on Thursday after reports said the Netherlands and Japan are close to joining the US-led effort to restrict exports of the technology to China.

Japan and the Netherlands are home to key suppliers of semiconductor manufacturing equipment, but it is not yet clear what form their restrictions would take.

“They should take that as a turning point and look for other markets,” he added, saying he backed Japan’s participation in the measures.

Japan mulls US push to curb chip exports without harming China ties

China is Japan’s largest trading partner and has said the US effort showed its “selfish hegemonic interest.”

The Biden administration issued sweeping new rules in October that include restrictions on the supply of US manufacturers’ most advanced chipmaking equipment to Chinese customers and limits on Americans working for Chinese semiconductor firms, a move aimed at choking off access to certain expertise.

Dutch chip equipment giant ASML told Bloomberg the US-led measures could also push Beijing to develop its own technology in advanced semiconductor-making machinery.

Beijing last month filed a complaint with the World Trade Organization aimed at overturning the US-imposed export controls. It also has a history of deploying economic sanctions amid political disputes with its neighbours.

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China condemns new US law aimed at boosting domestic semiconductor manufacturing

Earlier this month, Beijing stopped issuing visas for travellers from Japan and short-term visitors from South Korea in retaliation for the two countries introducing Covid-19 testing and other restrictions on people travelling from mainland China.

In 2017, China also dramatically scaled back trade with South Korea after then-president Moon Jae-in agreed to host a US anti-missile system. And in 2010, China banned exports of rare earths to Japan as tensions rose over East China Sea islands claimed by both countries.