China convinces Japan to remove limits on chip exports for global trade harmony

The global geopolitical crisis has had a significant impact on the development of technology. The ongoing conflict between Ukraine and Russia has widened the gap between the global military superpowers, and it is estimated that the conflict will take several years to resolve. Additionally, the United States has influenced other nations with high-tech capabilities in Europe and Asia to sideline Russia and China in semiconductor cup developments.

China Fights Back through Japan

The People’s Republic of China has been in conflict with the United States over global semiconductor control for several years. Before the Covid-19 pandemic, the Trump administration had implemented various measures to prevent Chinese tech companies from accessing United States-made semiconductor chips among other technologies. As a result, Chinese-based tech companies, including Huawei Technologies Co., have not been able to access key technologies from the United States and its allies.

In response, the United States government has cited security reasons, accusing the Chinese counterparts of using their technologies to advance nuclear weapons advancements. With China being accused of helping Russia evade sanctions put in place by Western countries, United States allies have played along with the White House card.

In recent developments, Chinese Commerce Minister Wang Wentao has asked the Japanese official to lift the restrictions on semiconductor chip export control. Notably, Wentao described the Japanese semiconductor export control measure as a wrongdoing that seriously violated international economic and trade rules.

The statements from Wentao to the Japanese Trade Minister Yasutoshi Nishimura were made on May 26 at the Asia-Pacific Economic Cooperation (APEC) conference in Detroit. Already, Japan and the Netherlands have played along with the United States’ rules to sideline Chinese demands on semiconductor chips.

Nevertheless, the G7 nations, led by the United States, have agreed to de-risk but not decouple from China.

As a result, the Chinese commerce ministry’s statement on Monday expressed that China “is willing to work with Japan to promote practical cooperation in key economic and trade areas.”

A.I Development as the Bigger Picture

The huge demand for artificial intelligence (AI) and supercomputers has spiked the need for advanced semiconductor chips. The high chip demand is evident from the Nvidia Corporation (NASDAQ: NVDA) stock market, which has rallied more than 166 percent YTD to a valuation of about $961.97 billion. In its latest quarterly revenue update, Jensen Huang, founder, and CEO of Nvidia, noted that the company is on the move to ramp up chip production to meet the high demand in the artificial intelligence market.

The Chinese government also wants to remain highly competitive in the technology industry, including the smartphone sector, 5G network development, digital economy, and artificial intelligence capabilities.