China’s commerce minister told Micron Technology Inc.’s president Beijing would welcome the U.S. semiconductor company deepening its footprint in the Chinese market. This is a further thaw in relations between the world’s top two economies. In a meeting on Nov. 1, Commerce Minister Wang Wentao told Sanjay Mehrotra, President and CEO of Micron Technology, that China will optimize the environment for foreign investment and provide service guarantees for such enterprises. The statement came a day after China’s cyberspace regulator said the country’s operators of crucial infrastructure should stop buying products from Micron because it poses “serious network security risks.”
The move was widely seen as a retaliation for Washington’s restrictions on chip exports to Beijing, which it says are necessary for national security. It also came as leaders of the G7 group of rich nations urged their allies to reduce risk and not “decouple” from China while Washington pressured its allies to restrict chip equipment sales to Beijing.
Micron is one of the most significant memory chipmakers in the world, and its China business accounts for about 15% of its revenues. In June, the Idaho-based firm announced a plan to invest 4.3 billion yuan (US$587.6 million) in its Xi’an plant, portraying it as a sign of its commitment to the Chinese market despite its partial sales ban by the government. The move is also in line with a recent thaw in bilateral relations, as officials from both countries work to organize a meeting between U.S. President Joe Biden and his Chinese counterpart Xi Jinping later this month.
However, it is still being determined if the detente will last beyond the Biden-Xi meeting. In the longer term, analysts warn that a war between China and the United States could escalate as Beijing seeks to re-energize the economy and combat what it sees as U.S. hegemony in the region.
Shares in local chipmaking-related firms rose by 2% and 5% on Monday, as the positive comments from the Ministry of Commerce overshadowed the fact that the Cyberspace Administration of China had banned the use of Micron’s memory chips in crucial infrastructure projects.
The news comes after U.S. authorities imposed new sanctions on several Chinese tech firms, including ByteDance and TikTok. The penalties were the latest in a series of actions by the United States to punish Beijing for its trade and technology policies. The latest penalties come amid a growing Sino-US trade war, which has raised fears of a possible recession in both countries and contributed to sluggish global economic growth. The world’s two largest economies have vowed to increase their efforts to negotiate a comprehensive trade agreement. But the talks have been held up by the ongoing row over a trade deficit. China has been seeking to cut its imbalance with the United States by reducing its imports, and the U.S. has responded by imposing new curbs on Chinese goods and companies. The two sides are expected to hold high-level talks this month to resolve the trade dispute.
