WTO urged to investigate chip export restrictions

China has called on the World Trade Organization to step up supervision of United States-led export restrictions on crucial semiconductor technologies, which it says violate the body's fairness and transparency principles.

The move demonstrates China's upholding of multilateralism and underlines its determination to safeguard the stability of global semiconductor supply chains, experts said.

Chinese representatives said at a regular WTO meeting this week that Japan, the Netherlands and the US should report their agreement on chip export restrictions to the body for scrutiny, if the agreement, which has been widely reported, exists, China Media Group reported on Wednesday.

The joint move by the three nations to curb chip exports to China violates the fairness and transparency principles of the WTO, the report quoted Chinese representatives as saying.

The Ministry of Commerce said on Tuesday that Beijing is seriously concerned about Japan's planned export restrictions on chip manufacturing equipment and called upon Japan to correct its wrongdoings.

The comments came after Japan said last week that it would restrict exports of 23 types of semiconductor manufacturing equipment, aligning its trade controls on technology with the US push to curb China's ability to make advanced chips. The Japanese government is seeking public opinion on the measures.

"The measures proposed by Japan are essentially harmful acts against China under the coercion of a certain country, which will not only damage the legitimate rights and interests of Chinese companies, but also cause Japanese companies to suffer, and damage the stability of the global supply chain," the Commerce Ministry said on its website.

"If Japan insists on obstructing bilateral semiconductor cooperation, China will take decisive measures to resolutely safeguard its legitimate rights and interests," it added.

China is the world's largest semiconductor market and the largest export destination of Japanese semiconductor manufacturing equipment. The industries of the two countries have long formed a close relationship between the upstream and downstream of the industrial chain, according to the ministry.

Data from the International Trade Centre of the United Nations showed that nearly 40 percent of Japan's chipmaking equipment exports went to the Chinese mainland in 2021, totaling about $11.8 billion. The numbers for US and Dutch exports to the mainland were $6.8 billion and $2.5 billion, respectively, over the same period.

More than 10 Japanese companies, including Tokyo Electron and Nikon, are expected to be directly affected by the planned export restrictions, Japanese media reported.

Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University's International Business School, said the WTO has a dispute consultation mechanism, and that if Japan pushes ahead with the planned chip restrictions, China can resort to the WTO framework to apply for punitive measures.

In December, China filed a request for a dispute consultation at the WTO against US chip export control measures.

Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation, said Washington has repeatedly abused its political power to impose a series of well-calculated restrictions on exports of advanced semiconductor technology to China.

Its attempts to coerce other countries to adopt similar chip restrictions on China will harm thousands of chipmaking companies around the world and increase political pressure and uncertainty, Bai said.

The World Semiconductor Trade Statistics organization has forecast that the global semiconductor market will decline by 4.1 percent this year to $557 billion — the first annual contraction since 2019.