US bans tech companies from investing in China for next 10 years

US bans on the delivery of advanced semiconductors to customers in China are being doubled these days with a new restriction designed to push the country further off the map as a producer of high-tech goods.

Aiming to consolidate its own position as a global leader in the high-tech products segment, the US is banning local companies from investing in the development of factories on Chinese soil, ending a long period in which the prospect of access to cheap labor and the many tax “benefits” offered by the Chinese state have turned the country into a high-tech electronics factory with global reach.

Part of a plan that has already provided for $50 billion in investment in the development of the local semiconductor industry, the new set of rules is intended to block Chinese manufacturers’ access to cutting-edge technologies developed in the US. Essentially, we’re seeing the same restrictions already applied to the giant Huawei, but imposed in a long-winded formula whereby Chinese manufacturers are gradually being denied access to cutting-edge technologies. The plan is based on the idea that the US and not China will remain in the role of the main source of innovation, hitting directly at the “tradition” of Chinese companies to be inspired by or copy entirely technologies developed in the West, helped by the way US tech companies have been “convinced” to bring the means to facilitate this plan by investing directly in manufacturing facilities located in China.

“We will put in place the necessary protections to make sure that those who receive CHIPS funds cannot compromise national security… are not allowed to use this money to invest in China, cannot develop cutting-edge technologies in China. … over a ten-year period,” according to US Commerce Secretary Gina Raimondo. , explaining the US Chips and Science Act programs.

“Companies receiving U.S. government money can only expand their factories in China that use already mature technologies and only to serve the Chinese market.”

In August 2022, US President Joe Biden signed a bill allocating $280 billion for high-tech development and scientific research amid fears that the US is losing its technological edge to China. The investments include tax breaks for companies building semiconductor factories in the US, while penalising companies that choose to undertake such plans in China.