China files WTO dispute against US ban on semiconductor chips, 'threatens global supply'

China on Thursday filed an official trade dispute at the World Trade Organization (WTO) against the United States for the unilateral curbs on the semiconductor chips, WTO said in a statement. Chinese government's dispute stated that US export controls restrict the ability of Chinese corporations from supplying semiconductors globally, building and maintaining supercomputers, and obtaining high-end computer chips that could have military applications.

China's commerce ministry lambasted the United States, saying its move "threatened the stability of the global industrial supply chains."  Beijing claims that the US ban implemented by the Commerce Department's Bureau of Industry and Security (BIS) violates the WTO's General Agreement on Tariffs and Trade (GATT) as well as the bilateral trade-related investment, intellectual property rights, and trade in services.

Referring to the ban, US Under Secretary of Commerce for Industry and Security Alan Estevez said in a statement that the BIS is "appropriately doing everything in our power to protect our national security and prevent sensitive technologies with military applications from being acquired by the People’s Republic of China’s military, intelligence, and security services." BIS noted, in its defense against China's WTO dispute on the export ban, that Washington this year has added 36 entities to its export restriction lists, most of which were located in China.

USD 50 bn in CHIPS to boost America's own semiconductor industry

Biden Administration banned the Chinese semiconductor chips and instead announced that it will expand its domestic production. The US consumes more than 25 percent of the world’s leading-edge chips but manufactures zero, the Biden administration noted. US Commerce Secretary Gina Raimondo said at a White House conference that the Department of Commerce plans to implement the USD 50 billion in CHIPS to boost America's own semiconductor industry.

US President Joe Biden last month signed a USD 280 billion bipartisan bill to enable high-tech corporations across the US  to manufacture the chips in a competitive move with China. 

“This past year, we saw the impact of the chip shortage on American families when car prices drove a third of inflation because of lack of chips, factory workers were furloughed, household appliances were often unavailable, all because of a lack of semiconductors,” Raimondo said at the briefing. “And as our economy and military become more reliant on technology, it’s that much more essential that we develop a strategy with values, outcomes, and structures that enable us to plan for an economy and manufacturing infrastructure that positions us to compete today and into the future,” she added.

In August, Biden signed $280 billion legislation, pumping $53 billion into the research and manufacturing of semiconductor chips. The multibillion-dollar bill labelled CHIPS and Science Act, which is Creating Helpful Incentives to Produce Semiconductors for America Act, aimed at boosting the spending in Washington's high-tech manufacturing sectors for the domestic production of microchips. The semiconductor chips are a hard-to-make component found in nearly every modern machinery and component, including defense weaponry. The bill would help the United States "win the economic competition in the 21st century" and was labelled as a "game changer."