Following President-elect Trump’s announcement of his plan to impose an additional 10% tariff on Chinese goods, the Ministry of Finance (MOF) of the People’s Republic of China (PRC) released a draft proposal that gives domestically produced items a 20% price evaluation advantage in government procurement. According to DigiTimes Asia, while this move was primarily an answer to America’s proposed import taxes, it will affect all non-Chinese products, making them less competitive versus locally produced goods.
However, even though this 20% advantage applies to any item manufactured within China, the MOF proposal primarily focuses on industrial manufacturing goods, except for agricultural, forestry, animal husbandry, fishery products, and mineral resources. Experts also say this policy targets American products sold in China, which could negatively impact some of the largest chipmakers, like Intel and Nvidia. This is especially true as China remains one of the bigger markets despite the numerous and ever-increasing sanctions the U.S. has applied to Beijing.
The call to focus more on domestically produced products, especially in the chip sector, isn’t limited to the PRC government. Some of China’s largest industry associations, including the Internet Society of China, China Semiconductor Industry Association, China Association of Automotive Manufacturers, and China Association of Communications Enterprises, have all called on Chinese companies to reduce their reliance on American-made chips and instead prioritize domestic products or expand cooperation with other international partners. The China Semiconductor Industry Association even released a press release saying, “U.S. chip products are no longer safe and reliable, and China’s industry will have to purchase American chips cautiously.”
All these moves seem to be fueled by Washington’s expansion of its. While many China-based firms say that these sanctions won’t stop China’s chip industry, the Chinese government is still reacting with its export restrictions, especially in rare earth metals. Aside from that, many Chinese firms are pushing forward with innovations of their own to replace the sanctioned items. While they’re still not yet self-sufficient when it comes to the latest semiconductor technologies, they have taken leaps and bounds trying to catch up with the West.
