Envoy warns China will ‘definitely’ respond to US tech curbs, but experts say Beijing’s options are limited
- Chinese ambassador Xie Feng says Beijing ‘cannot simply sit idly by’ as Washington considers new restrictions on investment and AI chip exports
- But China has few weapons for retaliation as it tries to keep up with US in semiconductor race, according to analysts
Speaking at the Aspen Security Forum in Colorado on Wednesday, he said the US had put more than 1,300 Chinese entities and personnel on sanctions lists and, as a result, “these people were forced out of a job and their families suffered greatly”.
“The Chinese people cannot remain silent. And the Chinese government cannot simply sit idly by,” he said.
China curbs critical metal exports in retaliation for chip-related sanctions
Before that, Chinese authorities in May issued a de facto ban on the sale of US chip maker Micron Technology’s products in the country.
Both moves were seen as retaliation for Washington’s export controls targeting China and a sign of escalation in the hi-tech war between the world’s two largest economies.
02:05
China imposes restrictions on US chip maker Micron, escalating tech war
China’s toolbox of countermeasures might not be deep enough as it has already sanctioned Micron and restricted the exports of the two technology-critical materials, according to Jun Zhang, an associate professor of economic geography at the University of Toronto.
“Given China’s huge import-export gap in the entire semiconductor value chain, China’s only potential weapon is the big market,” Zhang said.
He said Beijing might stop buying some semiconductor products from the US, but the country’s import reduction, especially at the higher end, may be exactly what the US government wanted.
“The US government only has limited ability to prevent American companies from selling their cutting-edge products to China, especially those with a high dependency on the Chinese market.”
However, he said China might take action without saying it out loud.
“It depends on how the [US-China] relationship and sanctions would evolve in the future,” Zhang said.
US tech curbs on China to ‘travel towards tightening’ despite pleas for calm
China is unlikely to win the semiconductor race with the US since it is too far behind in technology, especially in equipment, said a Chinese semiconductor engineer based in the US who spoke on condition of anonymity. He added that he did not expect the gap to change significantly in the next five years.
“Raising tariffs on chips is not feasible, it’s the general public who will pay the bill in the end,” he said.
“An embargo is even more unrealistic, we can’t just stop producing new cell phones for three years. So the countermeasures can only come from other industries.”
Lu Xiang, an expert on US-China relations at the Chinese Academy of Social Sciences, said China had been very restrained in pursuing reciprocal retaliation and would avoid actions that destabilise the global supply chain, but that did not mean it would let the US do whatever it wanted.
“I firmly believe that if we need to retaliate, we have enough measures to do so,” Lu said.
Still, he added that China did not want to go that far because of the “very large” potential impact on the global industrial chain.
“China will never want to see the global economy suffer more shocks.”
“[Beijing hopes] that bilateral relations will not deteriorate to the point where China will have to take large-scale countermeasures,” Lu said.
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“Needless to say, an escalation of US sanctions and Chinese countersanctions would be very bad news for multinationals operating in China,” he said.
Xie also said China did not want a trade war or tech war.
“Definitely, it’s not our hope to have a tit-for-tat … We want to say goodbye to the Iron Curtain as well as the Silicon Curtain,” he said.
