China-US trade war slows down a bit – baby steps?

In a bid to ease tensions with Beijing, the United States will limit the scope of its coming investment curbs against China to the semiconductor, artificial intelligence and quantum computing sectors – not extending those sanctions into biotechnology and clean energy industries.

The restrictions will be “narrowly targeted”; they will not be broad controls that would affect US investment broadly in China or have a fundamental impact on the investment climate for China, US Treasury Secretary Janet Yellen said in an interview with Bloomberg Television on Monday.

Bloomberg reported that the investment curbs against China will be announced by the end of August but won’t take effect until next year as “the policy grinds through Washington’s bureaucracy.”

The tone of the response from Chinese officials, while far from enthusiastic, is milder than that of Beijing’s response on April 21, which called the US “selfish” and its move a “blatant act of economic coercion and sci-tech bullying.”

“China opposes US politicizing and weaponizing of trade and tech issues,” Mao Ning, a spokesperson at China’s Foreign Ministry said on Tuesday. “It is in no one’s interest to place arbitrary curbs on normal technology cooperation and trade, violate the market economy principles and destabilize global industrial and supply chains.”

Mao said China hopes that the US will follow through on President Joe Biden’s commitment of not seeking to “decouple” from China, halt China’s economic development or contain China. It should create a sound environment for China-US economic cooperation and trade, Mao said.

The Semiconductor Industry Association (SIA), representing the US chips industry, in a statement called on both the Chinese and US governments to ease tensions and seek solutions through dialogue.

“Repeated steps to impose overly broad, ambiguous, and at times unilateral restrictions risk diminishing the US semiconductor industry’s competitiveness, disrupting supply chains, causing significant market uncertainty, and prompting continued escalatory retaliation by China,” said the SIA.