Reuters - Massive government investment in China's semiconductor industry risks
distorting the global market for integrated circuits, leading to damaging
overcapacity
and stifling innovation, U.S. Commerce Secretary Penny Pritzker
has warned.
The comments come at a time of growing trade tension between the Asian
giant and the United States over accusations of dumping, industrial
overcapacity and a souring business climate for foreign firms doing business in
China.
Republican presidential candidate Donald Trump has threatened to levy
punitive tariffs of 45 percent on imports of Chinese goods if he is elected.
In a speech on Wednesday, Pritzker sharply criticized a $150-billion
plan by the Chinese government to expand the share of Chinese-made integrated
circuits in the domestic market to 70 percent by 2025, from 9 percent now.
"Let me state the obvious: this unprecedented state-driven
interference would distort the market and undermine the innovation
ecosystem," Pritzker said at the Center for Strategic Studies think-tank
in Washington.
That level of investment would be equivalent to half of worldwide
semiconductor sales last year and result in market distortions similar to those
plaguing the steel, aluminum and green technology industries, Pritzker added.
"The world has seen the effects of this type of targeted,
government-led interference before," she said.
"The result has been overcapacity in the global marketplace that
has artificially reduced prices, cost jobs in both the United States and around
the world, and caused significant damage to those industries globally,"
Pritzker said.
It was "imperative we take steps to prevent a similar situation
from developing in the semiconductor industry," she added.
Such steps include a Commerce Department study of the global
semiconductor supply chain now underway, besides engaging with China, and other
governments, to persuade them to avoid policies that distort markets or spur
technology transfers.
"The U.S. government will make clear to China’s leaders at every
opportunity that we will not accept a $150-billion industrial policy designed
to appropriate this industry," Pritzker added.
Earlier on Thursday, 12 U.S. senators urged that Zhongweng
International's $2.3-billion purchase of Cleveland, Ohio-based Aleris Corp. be
rejected by a national security review panel.
"In addition, we are seeing new attempts by China to acquire
companies and technology based on their government’s interests – not commercial
objectives. And we have witnessed attempts to restrict access to China’s
domestic market," Pritzker said.
The technology industry depends on a global supply chain, open and fair
trade and innovation, she said, warning against government behavior that
disrupts the system and distorts markets.
"China’s effort to move up the value chain should be the result of
healthy competition and free and fair trade, not state-directed investments
aimed at distorting global markets," Pritzker said.
"In addition, no government should require technology transfer,
joint-venture, or localization as a quid pro quo for market access."
Reuters.
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