According to Reuters, Commerce Secretary Gina Raimondo said on May 11 that China opposes the U.S. huge chip bill because it will give the world’s largest economy a competitive advantage.

On May 12, the U.S. will step up formal negotiations on a compromise measure that would invest 52 billion dollars in semiconductor manufacturing subsidies and bolster U.S. competitiveness with China’s technology.

A final agreement might take months to reach.

The persistent shortage of chips has severely disrupted the global auto and electronics industries, forcing some companies to cut production. Raimondo said increasing chip production was a national security issue.

Raimondo said she was not surprised when China didn’t want the U.S. to pass the bill. However, she added that Beijing knew this bill would empower the U.S. to surpass the world’s largest economy in technology.

According to Raimondo, China had invested 160 billion dollars in domestic semiconductor production, but it wants the U.S. to spend only 52 billion dollars.

She also had heard that China was lobbying American firms. They were deeply concerned because they understood how critical it was for the U.S.

In November last year, in a letter written by the Chinese embassy’s economic and commercial office in Washington, China pressed executives to persuade members of Congress to change or delete specific proposals that aim to boost U.S. competitiveness.

According to the classified internal letter seen by Reuters, Chinese officials have warned companies that they risk losing market share or revenue if the bill becomes law.

China has previously voiced its opposition to the legislation, charging that it fuels anti-China sentiment and Cold War-era thinking.

Earlier this week, President Joe Biden called on Congress to quickly pass the Bipartisan Innovation Act, including the CHIPS Act. He stressed that the bill aims to strengthen U.S. technology and innovation and keep pace with China, a major geopolitical rival.

Biden said it would help strengthen our economy and national security. But, he added that it’s no wonder Beijing is lobbying—paying lobbyists—against the passage of this bill.

Sign up to receive our latest news!

By submitting this form, I agree to the terms.