Beijing complains about politicization of fabulous German chip deal

(MENAFN-Asia Times)

China has called on other countries to provide it with a non-discriminatory market environment after the German government blocked the sale of a semiconductor factory to a Chinese company.

China’s Foreign Ministry said countries including Germany should refrain from politicizing normal economic and trade cooperation or using national security as a pretext to practice protectionism.

If the Chinese response to a very disappointing decision gives the impression that Beijing was biting its nails while pretending to judiciously contemplate their flavor, there indeed seems to have been a studied effort in Beijing not to appear to overreact. Hopes for Germany, after all, weighed heavily – and still weigh heavily, even after this setback – in China’s strategy to fight the US-led chip war.

Germany’s Ministry of Economy and Climate Action dropped the hammer on Wednesday, issuing a statement saying it had banned Elmos Semiconductor, an automotive chipmaker, from selling its Dortmund plant to Silex Microsystems AB, a Swedish unit of Chinese Sai Micro Electronics.

The decision came after German Chancellor Olaf Scholz met Chinese President Xi Jinping in Beijing on November 4. The two leaders said the two sides would strengthen their economic ties.

Chinese commentators have accused the United States of pressuring Germany to make the move. The scholars said Scholz’s short visit to China would not change the general trend of the European Union diversifying its supply chain from China.

Scholz is the first G7 leader to visit China since the outbreak of the global pandemic in early 2020. He is also the first Western leader to meet with Xi following the week-long closure of the Party Congress in Beijing on October 22. The session renewed Xi’s term. as General Secretary of the Communist Party of China.

Ahead of Scholtz’s trip, media said the German cabinet had agreed to an amended deal that would see Cosco Shipping Ports, a Chinese state-owned company, take a minority stake in Germany’s Container Terminal Tollerort (CTT) in Hamburg.

That deal and the proposed sale of chipmaking to Silex Microsystems had previously been described by Chinese media as Scholz’s “big giveaways” to China ahead of his meeting with Xi.

Silex Microsystems received official documents from German authorities on Wednesday night prohibiting its acquisition of Elmos’ Dortmund autochip production line, Sai MicroElectronics in a filing on the Shenzhen Stock Exchange on Thursday.

The deal “cannot be completed due to the ban,” Sai MicroElectronics said. “The companies involved in the agreement will carefully analyze the decision received and decide on their next move.”

The company expressed deep regret that the German Ministry of Economics made this final decision. He said he remains optimistic about its automotive chip business and related developments.

Zhao Lijian, spokesperson for the Chinese Foreign Ministry, said on Wednesday:

A slightly more stark assessment came from Fu Liang, an independent technology analyst, quoted by the Global Times as saying that the global competitiveness of the German semiconductor and automotive sectors would be negatively affected by the stalling of the Silex deal. Microsystems.

He said the promising automotive electronics sector should have been an opportunity for China and Germany.

Tian Liu, a Hubei-based columnist, in a Thursday report that the German government had come under pressure from the United States to block the deal.

Tian said: “Shortly after Scholz returned from China, he received a phone call from Biden. It’s hard for people not to link the two issues.

“We have reason to believe that blocking the deal was pushed by the Biden administration and German anti-China politicians. We don’t know if it’s Scholz’s decision or not, but we won’t underestimate any politician’s acting skills.

He said that if Scholz really hoped to improve Sino-German relations, the Chancellor should use his power to revive the deal, as he had done before to push the CTT deal forward.

Sticking to its own loosely worded version of the measured scenario, the White House said on November 6 that US President Joe Biden and Scholz had affirmed in a phone call their joint commitment to upholding the international order based on rules, human rights and fair business practices. .

On Oct. 7, the United States banned exports of its high-end chips and chipmaking equipment to China for national security reasons. The Biden administration is also reportedly working to persuade allies, including Japan and the European Union, to do the same.

Chinese scholars said China should focus on developing its auto chip industry, which only requires mature semiconductor technologies.

Jian Junbo, deputy director of the Center for China-Europe Relations, Fudan University,, that Scholz had a long-term economic view as he insisted on visiting China despite opposition from local politicians and some countries Europeans.

Jian said the polarization of the global economy, caused by the Russian-Ukrainian conflict, was not something Germany and Europe wanted to see. He said Scholz wanted to stop this trend by visiting China because a decoupling with China did not meet Germany’s interests.

Ma Bin, an assistant researcher at Fudan University’s Center for Russian and Central Asian Studies, said Scholz’s “flashmob” visit to China could improve Sino-German relations in the short term, but it would not be able to change the EU’s overall policy towards China, which has created a negative impact on Sino-EU relations in recent years.

The China Association of Automobile Manufacturers said last month that China had overtaken Germany to become the world’s second-largest auto exporter after Japan. He said China exported 2.11 million vehicles while Germany shipped 1.91 million units in the first three quarters of this year.

Analysts said China is likely to overtake Japan to become the world’s largest auto exporter in 2023. But they also warned that China will face more punitive sanctions from the United States in the future after have taken this step.

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James R. Rhodes