Why China is Asking for US Investment Ban Reversal
China's International Trade Council asked the U.S. to consider regulations that forbid or restrict U.S. investments. This is in response to the U.S. Commerce Department issuing its final rule on the CHIPS and Science Act. This will restrict semiconductor firms that receive federal funds from expanding in China.
President Biden signed the executive order in August.
China's Ministry pointed out the vague and broad restrictions. It cited the lack of bifurcation between military and civilian use. These rules will come into effect next year.
Investors are not reacting at all to the ban. Nvidia (NVDA) continues to trade at very high multiples. Advanced Micro Devices (AMD) rebounded back to over $100 last week. Taiwan Semiconductor (TSM) is still a positive return for shareholders in 2023. Markets expect that China will get the semiconductors it needs through third parties. For example, it could buy chips from Saudi Arabia or Asian countries like Vietnam.
If the ban works, China will face further headwinds in developing its technology industry. It will delay its goal to become the biggest economy in the world.
Investors should look out for the Asian country to retaliate. It may further restrict sales or the usage of Tesla vehicles or Apple products.
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.