Raimondo Argues for More China Chip Controls, but Not Decoupling
The U.S. should continue working with allies to restrict sales of advanced semiconductors and semiconductor tools to China after the Biden administration leaves next month, Commerce Secretary Gina Raimondo said. But she also said she hopes the Trump administration prioritizes tools other than export controls and tariffs to counter China, and she warned against a potential decoupling of the two economies.
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“There's certain technologies we have [that] China wants. Deny them,” said Raimondo, speaking during the Dec. 7 Reagan National Defense Forum in California. “But that doesn't mean cutting off trade with China. That's escalatory, and that hurts America.”
Raimondo said the Biden administration has imposed the “most robust, expansive export controls in U.S. history,” specifically pointing to the hundreds of pages of regulations Commerce has published over the last two years restricting certain exports of advanced semiconductors and chip making tools to China. But she stressed that many of those regulations will only be effective if the U.S. can coordinate its restrictions with trading partners that also make advanced chip products.
“You don't go into a war without your allies. Well, don't go into export controls without your allies,” she said. “When I set the rules, I had to make damn sure China can't just buy this stuff from Japan or Korea or the Europeans. So that's why we have to work with them.”
Raimondo said she would tell the incoming commerce secretary nominee, expected to be billionaire businessman Howard Lutnick (see 2411190036), to continue to be “tough” and “straightforward” with China. While she said export controls and sanctions are important tools, Raimondo said she would tell the next administration that those tools alone won’t be enough for the U.S. to maintain its technological lead. She said they’re “just a speed bump" for Beijing.
“We are not going to beat China by trying to slow them down. We're going to beat them by going faster,” Raimondo said, which should include investments in American technology companies. “It's a race. Tug on [China’s] shirt where you can to slow them down. But you better just be prepared to run faster.”
She also urged the incoming administration to continue to “modernize” Commerce, including the Bureau of Industry and Security. BIS is starting to use “AI-enabled analytics so we can be better and faster,” but more needs to be done, Raimondo said. “I would continue to modernize the department in that way.”
Raimondo also continued to argue against a decoupling of the U.S. and Chinese economies, calling it a “fool’s errand.” But she also said she thinks Beijing wants to decouple.
“Why do you think they're building 21 new semiconductor factories? Why do you think GM is struggling to sell cars in China and [Chinese electric carmaker] BYD is producing millions of cars a year? They want to decouple,” Raimondo said. “I think that's bad for the world, and I think it's bad for certainly America.”
She also touched on her trip to China last year, during which Huawei announced a new phone made with a 7-nanometer chip -- the type of chip that U.S. export controls were designed to slow China from acquiring and producing (see 2310060065 and 2310060062). “The Chinese told me not to take it personally,” that the announcement during her visit “was a coincidence,” Raimondo said. “It was probably not a coincidence.”
She noted that the U.S. last week added a range of Chinese chip companies to the Entity List and issued new export controls on semiconductor manufacturing equipment that China needs to make advanced chips (see 2412020016).
The U.S. is “doing everything we can, working with the Dutch and the Japanese -- it’s a big deal -- to more effectively deny China the tools they need to make the chips that will go in the Huawei phone,” she said.