On January 11th, Minister of Commerce Wang Wentao held a phone call with US Secretary of Commerce Raymond.
This call is to implement the important consensus of the San Francisco meeting between the two heads of state. After the meeting between the two heads of state in November last year, the Commerce Ministers of China and the United States held talks in San Francisco.
It is worth noting that the press release of this call mentioned a term - the communication and exchange mechanism between the two ministries of commerce.
Last August, US Secretary of Commerce Raymond visited China, and both China and the US agreed to establish multi-level communication channels between the two ministries of commerce.
In this communication, Wang Wentao focused on expressing serious concerns about the US restrictions on third-party exports of lithography machines to China, investigations into mature process chip supply chains, and sanctions against Chinese companies. The two sides also discussed the issue of national security boundaries in the economic and trade fields between China and the United States.
Why focus on these four things?
The first thing mentioned during the call was the issue of the United States restricting third-party exports of lithography machines to China.
Who is the "third party"? At the regular press conference of the Ministry of Commerce on the day of the call, spokesperson Shu Jueting responded to the issue of direct US intervention and interference with Dutch companies exporting lithography machines to China.
At the beginning of this month, American media reported that, at the request of the US government, Asma had cancelled some of its previously scheduled orders for sales to China.
In this way, it is to portray Asma's obedience to the United States and to fully cooperate with the restrictions imposed by the United States on China.
But Asma's actual delivery to China is not as guided by American media.
Asma's financial report for the third quarter of last year showed that the backlog of orders from customers in Chinese Mainland who purchased lithography machines in advance had been basically delivered.
In fact, Asma had already accelerated its delivery to China even before the risk of export restrictions came.
Last November, China's imports of lithography machines from the Netherlands increased by 1050% year-on-year in value, almost all of which came from Asma.
It is precisely with such response measures that when American media portrayed "Asma canceling orders from China", Asma stated in its official announcement that the sudden revocation of export licenses or the latest export control restrictions in the United States would not have a significant impact on its financial prospects for 2023.
And Asma was able to give a warning because this game has to go further back to October last year.
At that time, the United States announced new control regulations, under which Asma's lithography machine products had the right to restrict their exports if they contained any American components.
Zhou Mi from the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce has been tracking the trends in the Sino US economic and trade fields. He told Tan Zhu that on the one hand, American capital has direct and significant control over Asma in terms of equity participation and equity; On the other hand, the United States, through some semiconductor technology alliances, also constrains the Dutch lithography machines in the authorized use of technical standards.
This has led to Asma firmly considering China as one of the most important markets, sometimes having to bow down in the face of pressure from the United States.
The fundamental purpose of the United States is to suppress and contain China, with the intention of delaying China's development in the field of high-tech. As a third party, the US government would interfere with normal trade between Chinese and Dutch enterprises, which neither China nor the Netherlands would be happy to see.
It is in this context that the Chinese Ministry of Commerce rarely directly names the United States for pressure and interference.
In addition to lithography machines, the United States is showing signs of expanding restrictions on China in the chip industry. The second concern raised by China this time is the upcoming mature process chip supply chain investigation by the United States, which is a typical example.
Last month, the US Department of Commerce announced that it would launch a supply chain investigation into mature process chips in January of this year.
Mature process chips mainly refer to chips with 28nm and above, which is different from the advanced process that the United States previously focused on.
According to relevant research data, from 2023 to 2027, the production capacity ratio of mature and advanced wafer foundry processes worldwide is about 7:3, which means that mature processes are the mainstay.
In terms of capacity distribution of mature processes, Chinese Mainland accounts for 29%, Taiwan, China accounts for 49%, and the United States accounts for 6%. It is expected that the proportion of Chinese Mainland will continue to rise in the next few years.
The United States is paying more attention to China's advantages and conducting in-depth research.
Not long ago, the US Department of Commerce released a basic assessment report on the US microelectronics industry. This report surveyed 194 companies that design, manufacture, or distribute semiconductor devices in the United States, covering 95% of American semiconductor companies.
Through conducting research on these companies, the US Department of Commerce has concluded that in the past few years, China has invested heavily in the production of mature process chips, creating competitive pressure on US companies.
In contrast, the development of chip manufacturing in the United States in recent years has not been smooth.
When the US Department of Commerce discussed this report, another document related to it clearly illustrates the issue - the 2022 Chip and Science Act, which came into effect in August 2022.
At that time, the 2022 Chip and Science Act attracted multiple companies, including Intel, Samsung, TSMC, and Texas Instruments, who announced plans to establish new chip manufacturing plants in the United States to compete for the huge amount allocated by the bill.
In the following year, the US Department of Commerce received 460 letters of intent from semiconductor companies in 42 states.
But the real funding is delayed.
It was not until December 2023 that the US Department of Commerce announced the first funding. This funding only involves $35 million and is allocated to an arms dealer to manufacture chips needed for F-15, F-35 fighter jets, and other aircraft.
This can explain why new manufacturing plants such as TSMC's Arizona plant and Intel's Ohio plant have been repeatedly delayed in the past year and a half.
The United States has not built any new large-scale chip manufacturing plants for over 30 years, and there is a significant shortage in supporting facilities, labor, and other aspects.
Against this backdrop, the US Department of Commerce has announced an investigation into the mature process chip supply chain.
If you can't develop yourself, then suppress your opponents. The so-called investigation is nothing more than to provide a basis for restricting more Chinese chip companies from manufacturing.
The hypocrisy of this investigation can be seen from the basic assessment report of the US microelectronics industry mentioned above.
Tan carefully reviewed the full text of this over 100 page report and found some details that the US government did not pay attention to:
Many companies do not support imposing restrictions on China.
74 companies have stated that they have lost trading opportunities due to the US government's export control measures. This is because originally, these companies would spend time and money to ensure compliance with transactions, but in the face of increasingly stringent and complex export control measures by the US government, these companies can only choose to cancel transactions directly.
The problem is that over the past five years, for these US based companies, China has been their largest overseas market, with sales in the Chinese market surpassing those in the US domestic market in recent years.
And for some of the reasons why the US government has sanctioned Chinese companies in the past, such as China's "coercion" of these companies to share technology and their "restricted operations" in China, these companies have also given opposite conclusions to the US government.
The formation and development of the global supply chain are the result of the joint action of market laws and corporate choices. However, the United States hopes to find some excuses through such investigations to artificially intervene in the industrial and supply chains, and to instrumentalize and weaponize economic and trade issues.
The supply chain of mature process chips involves multiple large-scale key industries such as telecommunications and automobiles, and the actions of the United States will undoubtedly bring new risks to the global industrial and supply chains.
Therefore, when encountering such important issues, the Chinese and American Commerce Ministers communicated in a timely manner, and the Chinese side expressed serious concerns.
In fact, according to the previous consistent operation of the United States, after the so-called investigation, the United States will launch a new round of sanctions against Chinese companies.
In this communication, the Chinese side also expressed serious concerns about the US sanctions and suppression of Chinese enterprises.
Not long ago, the US Department of Commerce updated three contents of the "Export Control Rules for Advanced Computing Chips and Semiconductor Manufacturing Equipment", modified the October 2022 version, strengthened export restrictions on artificial intelligence related chips and semiconductor manufacturing equipment to China, and added multiple Chinese entities to the "Entity List" of export controls.
How should we overcome this difficulty?
The independent innovation of core technologies by Chinese enterprises is a crucial entry point.
In the past few years, the proportion of R&D expenses of some top technology companies in China has continued to rise from 14.1% in 2018 to 25.1% in 2022, making it the highest proportion of R&D investment in the world.
This is not a singular phenomenon.
A survey of 240 Chinese companies sanctioned by the United States found that the impact of sanctions has actually forced Chinese companies and their partners to form networked response measures.
Specifically, by analyzing the social networks of sanctioned enterprises, it can be found that on average, each sanctioned enterprise will be associated with 1.8 supply chain related enterprises, 0.4 research and development cooperation related enterprises, 0.6 technology cooperation and consulting related enterprises, and 0.46 investment related enterprises.
That is to say, in addition to supply chain relationships, sanctioned enterprises also have technical cooperation and consulting relationships with other enterprises.
A dense network of technological cooperation can form a community of "huddling together for warmth". If businesses in the community can work together to solve problems, there is hope to diversify the risk of being sanctioned by the United States.
This is also why we often say that the constraints of technological sanctions are also opportunities for Chinese companies to move towards self-reliance and self-improvement.
As for the hysteria of the United States, it is its strategy towards China that has gone wrong.
To fundamentally improve this situation, we need to start from the crux of the US strategy towards China.
During this meeting, both sides also discussed the issue of national security boundaries in the economic and trade fields between China and the United States.
A prominent feature of the recent month's exchanges between China and the United States is the particularly frequent discussion on security issues:
From January 8th to 9th, the 17th China US Ministry of National Defense Work Meeting was held, co chaired by leaders of the International Military Cooperation Office of the Central Military Commission and the Assistant Defense Minister of the United States.
On January 10th, State Councilor and Minister of Public Security, Wang Xiaohong, made a video call with US Secretary of Homeland Security, Mayokas, as requested.
On January 10th, Liu Jianchao, Minister of the External Relations Department of the Central Committee of the Communist Party of China, met with the Chief Deputy Assistant to the President of the United States for National Security Affairs, Fenner, in Washington.
These departments are all related to the national security boundaries in the US economic and trade field.
For example, as mentioned above, the 2022 Chip and Science Act of the United States is first allocated to the defense sector. As for the National Security Assistant to the President of the United States, he directly leads the US strategic competition with China, while the US Department of Homeland Security is responsible for overseeing the list of entities involved in the Xinjiang related bill.
Experts told Mr. Tan that when discussing the issue of national security boundaries in the field of China US economic and trade, the main focus is on achieving consensus on the goal of controlling differences between China and the United States. For the United States constantly seeking excuses to implement various restrictive measures against China, both sides will explore some basic management models, clarify the scope of restrictions, and reduce market uncertainty.
It is worth noting that this is the second time recently that the economic and trade circles of China and the United States have discussed the issue of national security boundaries in the field of economic and trade.
Being able to continue chatting is a signal in itself.
In the past few years, the generalization of national security concepts by the United States has brought negative factors to the economic and trade relations between China and the United States. With the stabilization of China US relations, the economic and trade exchanges between China and the United States have strengthened. Today, the exchanges between the economic and trade exchanges between China and the United States have begun to frequently discuss the core contradictions between the two sides.
It is obvious that the future of China US relations will require both sides to continue their efforts and move towards each other.