China criticizes U.S. chip aid law

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China criticizes U.S. chip aid law

China criticized a U.S. law to encourage processor chip production in the United States and reduce reliance on Asian suppliers as a threat to trade and an attack on Chinese business.

The law signed by President Joe Biden promises $52 billion in grants and other aid to investors in U.S. chip factories. It responds to the warnings that supplies might be disrupted if China attacks Taiwan, which produces up to 90% of high-end chips. China's ruling Communist Party claims the self-ruled island is part of its territory.

Foreign Ministry spokeswoman, Wang Wenbin, said the measure will disrupt international trade and cause global semiconductor supply chains to be disrupted. China opposes that. Wang said that part of the law restricts companies' normal investment and economic and trade activities in China.

The coronaviruses hampered the production of goods from smartphones to autos and highlighted the world's reliance on Taiwanese chips and Chinese factories that assemble most electronic devices.

After a civil war, fears of disruption have been heightened by Chinese threats to attack Taiwan, which split with the mainland in 1949.

Beijing conducted military drills around the island last week in retaliation for a visit by Speaker Nancy Pelosi of the U.S. House of Representatives. China believes visits by American officials to Taiwan might encourage its leaders to make their de facto independence permanent, a step that the mainland says would lead to war.

The Congressional Budget Office says research spending that would total about $200 billion over the next 10 years would be required by the CHIPS and Science Act.

The Communist Party has spent tens of billions of dollars developing China's chip production industry. Its factories make low-end chips for autos and other products but can't supply high-end smartphones and other devices.