Global Courant
Top Chinese and US economic officials may meet in Beijing in early July, but the potential meeting is now clouded by threats from both sides of a chip ban.
Treasury Secretary Janet Yellen said in a TV interview on Wednesday that she hopes to visit China and reconnect with new leaders, despite the disagreements between Beijing and Washington. As of Thursday evening, Beijing had not yet confirmed Yellen’s trip.
China’s May sanctions against Micron have failed to smooth over the fraught relationship.
Meanwhile, the US is considering strengthening its export bans to prevent China from using its AI chips to make weapons or violate human rights, the media reported.
Nvidia, a maker of graphics processor (GPU) chips, will not be able to ship its A800 and H800 artificial intelligence (AI) chips to China if the U.S. tightens export controls, the reports said. The company tailored the two products for Chinese markets after being banned by the US government from exporting its A100 and H100 chips to China last August.
The decision will be likely announced after Yellen’s visit to Beijing, according to the Wall Street Journal.
Chinese commentators said it is ridiculous that the US is tightening its sanctions against China while trying to hold talks in Beijing. They said China should consider further sanctioning US memory chipmaker Micron Technology.
“China and the US are in contact for dialogue and exchange at different levels,” said Mao Ning, a spokesman for China’s foreign ministry. said at a regular media briefing on Thursday when asked about Yellen’s China trip.
At the same time, Mao criticized US Secretary of State Antony Blinken – who visited Beijing on June 18 and 19 – for smearing China in a recent speech.
“We are dissatisfied with Blinken’s comments. Due to a misperception of China, the US is mispolicing China by restraining and suppressing it, discrediting it without any justification, and willfully interfering in its internal affairs,” Mao said. “The words and actions of the American side violate basic standards of international relations. Of course, China is firmly against it.”
She said the US should stop making irresponsible remarks and take concrete steps to fulfill the promises made.
In a review of his recent trip to Beijing, Blinken told CBS on Wednesday that both the US and China have obligations to responsibly manage their bilateral relationship and ensure that their deep differences do not escalate into conflict.
“One of the things I said to my Chinese counterparts on this trip was that we keep doing things and saying things you don’t like, just as you will undoubtedly keep doing and saying things we don’t like,” he said .
Investment Restrictions
Since US media reported in April that US President Joe Biden was about to sign an executive order banning US funds from investing in China’s high-tech sector, Beijing has shown more willingness to communicate with Washington.
Biden originally planned to announce the investment restrictions before Japan hosted the G7 summit on May 19-21. However, he didn’t. Nikkei reported on June 10 that the White House is still trying to get key allies on board and navigate domestic backlash in Congress and on Wall Street.
Monday Bloomberg reported that Yellen plans to visit Beijing in early July and meet Chinese Vice Premier He Lifeng, who took office in March. It said the Biden administration’s investment restrictions are nearing completion and will be ready by the end of July.
In early July, the US Department of Commerce will announce its decision to stop Nvidia and other chip makers exporting chips to customers in China and other countries of concern without first obtaining a license, according to the Wall Street Journal.
Gao Lingyun, a researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences, told the Global Times that the possible extension of the ban on chip exports will harm the interests of US chipmakers, which have sold about 30% of their products in the Chinese market.
Gao said Yellen, who has a reasonable understanding of Sino-US economic and trade relations, should persuade China to buy more US sovereign debt during her trip, but regrets being caught by the anti-China hawks in Washington.
Colette Kress, Nvidia’s chief financial officer, said Wednesday that the company is aware it may be restricted from shipping A800 and H800 chips to China.
“In the long run, restrictions prohibiting the sale of our data center GPUs to China, if implemented, would result in a permanent loss of opportunity for the U.S. industry to compete and lead in one of the world’s largest markets and a have an impact on our future activities. and financial results,” she said.
Shares of Nvidia closed 1.8% lower at US$411.17. Shares are up 187% year-to-date as the company decided to invest in AI technology. Last month, Nvidia said it will build one of the world’s fastest AI cloud supercomputers in Israel and also an AI research center in Taiwan to accelerate its Omniverse project, a computing platform that supports 3D applications.
Good cop, bad cop
A June 19 meeting between Chinese President Xi Jinping and Blinken eased political tensions between China and the US, but failed to stop Washington from unveiling more curbs.
Blinken said in a post-meeting press briefing that the US government will continue to prevent its technologies from being used against the American people — for example, in making hypersonic weapons or human rights violations in China. He said more US officials will visit China in the coming weeks.
A columnist from Shanxi published a Wednesday article captioned, “Yellen wants to visit China, but Biden is busy preparing sanctions. Can the US show some sincerity?”
“Undeniably, the actions of the US government are ridiculous,” says the writer. “The US is threatening to impose more curbs in an attempt to force China to compromise in the negotiations. This is an old trick, the same as it did before Blinken’s trip to China.
“The U.S. Treasury Department plays a good cop, while the Commerce Department plays a bad cop. Whatever happens, they will continue with the so-called America First strategy,” he says.
He says Beijing must remain vigilant about upcoming US actions, which have so far remained hostile to China.
“Last month, China banned its major infrastructure managers from buying Micron products. If the Biden administration imposes new chip export bans on China, will China take countermeasures?” Ren Chiming, a Phoenix TV host, say in a video on Wednesday. “It is likely that the chip war between China and the US will continue to intensify.”
Shortly after the end of the G7 summit on May 21, the Cybersecurity Review Office, part of the Cyberspace Administration of China, sanctioned Micron for posing network security risks. Chinese media criticized Micron for cutting back its production in China in recent years.
On June 16 Micron said it would invest 4.3 billion yuan (US$603 million) in its chip packaging facility in Xian over the next few years. The investment includes the purchase of equipment from a division of Powertech Technology in Taiwan.
Read: China and US resume talks, but ‘risk reduction’ lingers
Follow Jeff Pao on Twitter at @jeffpao3
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