How Xi Jinping Is Preparing To Win Chip Battle With US: $143B Package, WTO Dispute, Allying With South Korea

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China is reportedly planning a one trillion yuan ($143 billion) support package for its semiconductor industry to counter Washington’s sweeping export controls on chips, a day after launching a W.T.O. dispute. 

What Happened: Beijing, in a bid to bolster the semiconductor production and research activities in the country, is planning to roll out one of its biggest fiscal incentive packages over five years.

Chips have become a geopolitical hot button due to their soaring demand. As Chinese President Xi Jinping calls for his country to “win the battle” in core technologies, the dispute could stretch further. 

See Also: Xi Jinping Hails ‘New Era’ Of China-Saudi Ties As Team Biden Watches Pivotal Riyadh Trip ‘Mindfully’

Xi’s government launched a trade dispute at the World Trade Organization against the U.S. over its chip export control measures, which it claims have “threatened the stability of the global industrial supply chains.” 

However, Washington argued that the W.T.O. is not the right forum to discuss this as “these targeted actions relate to national security.”

China is also lobbying U.S. ally South Korea to end Washington’s “​​unilateral bullying,” reported SCMP.

Chinese Foreign Minister Wang Yi urged his South Korean counterpart Park Jin to oppose U.S. legislation aimed at controlling the export during a meeting.

Targeting the U.S., Wang said, “All countries should stand up and resist this outdated anti-globalization thinking and unilateral bullying, and jointly maintain and practice true multilateralism.” Wang added that Beijing was willing to work with Seoul to strengthen supply chains. 

Meanwhile, according to Reuters sources, China could implement its $143 billion package as soon as the first quarter of next year in a major step towards self-sufficiency in chips, aimed at slowing U.S. technological advances.

The report noted that the majority of the financial assistance from the package would be used to subsidize the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants or fabs

Washington is also lobbying some of its partners, including Japan and the Netherlands, to tighten exports of equipment used to make semiconductors to Beijing.

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