Chip 'guardrails' guarantee US companies will be collateral damage in attack on China's tech: China Daily editorial

The rules the United States Department of Commerce issued last Friday are meant to prevent China and a few other "countries of concern" from benefiting from US government financing under its CHIPS and Science Act of 2022.

As a milestone statute with unprecedented bipartisan support, the act is a major US endeavor to suppress Chinese progress in cutting-edge science and technologies. While trying to cut China off from the latest developments in semiconductor technologies, the act provides $52.7 billion in federal subsidies for domestic semiconductor production, research and workforce development. Friday's rules are designed as additional "guardrails" for its implementation, and thus carry unusual significance.

"These guardrails will protect our national security and help the United States stay ahead for decades to come," said US Commerce Secretary Gina Raimondo in a statement. "We have to be absolutely vigilant that not a penny of this helps China to get ahead of us," she told the US Congress last Tuesday.

The rules prohibit funding recipients from significantly expanding semiconductor manufacturing capacity in foreign countries of concern for 10 years. They also restrict recipients from some joint research or technology licensing efforts with foreign entities of concern.

Along with previous restrictions on the exports of chips, technology transfer and investment control, such "guardrails" seek to keep China from benefiting from US technology, business know-how and funding. As the present conditions of Chinese industry leaders such as Huawei and others indicate, such constraints indeed cause tremendous troubles for Chinese enterprises, for the time being. An undersupply of chips is a common headache across many industries these days.

But the measures not only do harm to Chinese industries. The US business community is also suffering from their government's recent efforts to throttle the Chinese semiconductor industry.

It is also naive to believe China has been a "free rider" on US technology progress and that suppressing Chinese companies in this way will naturally protect US national security.

The US business community is against harsh restrictions because about one-third of their revenues come from China. They know better than the China hawks in Washington that overly restrictive measures will disrupt supply chains and hamper their global competitiveness. China's robust market is not only a source of profits, but a peerless catalyst to technological innovations and applications.

The idea to keep China lagging behind the US by means of such restrictions is unrealistic. Not only because of the impossibility of a complete US monopoly of the global technology market, but also because Chinese science and technology won't be held at a standstill.