Tag Archives: China

U.S. chip subsidy effort faces pushback over China issues

By Stephen Nellis, David Shepardson and Michael Martina

WASHINGTON (Reuters) – A series of amendments for a $190 billion U.S. Senate bill aimed at countering China’s technology challenge are in limbo after business groups protested proposals intended to ensure that none of the money finds its way to China or other U.S. rivals.

New regulations or reviews of investments or deals in China could disrupt U.S. businesses’ future operations in that country, which include semiconductors and medical equipment. The bilateral trade deficit has run more than $100 billion a year since 2002.

Senators from both sides of the aisle want “guardrails,” such as mandatory security disclosures and interagency reviews to stop U.S. businesses from compromising national security by outsourcing critical technologies to China.

The Senate bill authorizes $120 billion for high-tech research and another $54 billion to subsidize U.S. semiconductor production. For chip factories, it makes no distinction between foreign recipients and U.S.-based firms in determining who gets funds for U.S. facilities.

A key goal of the funding is to bring the world’s most advanced chip plants to the United States, and only Taiwan Semiconductor Manufacturing Co and Korea’s Samsung Electronics Co Ltd have the technology to do that.

Florida Republican Senator Marco Rubio has proposed an amendment requiring U.S. national security officials to screen recipients and require disclosure of funding or support from foreign entities, including the Chinese government or Chinese state-owned enterprises.

TSMC and Samsung both have operations in China.

Another amendment from Democratic Senator Bob Casey and Republican Senator John Cornyn would require an interagency review of any U.S. investments in China or a shortlist of adversarial countries. That would mark a huge change for U.S. law, which for decades has had provisions for screening inbound investments, but not for outbound.

“If a company wants to offshore semiconductors to China, we need to know about it,” Casey said from the Senate floor on Wednesday. “Yet, business interests, like the U.S. Chamber of Commerce and the U.S.-China Business Council, are organizing against this commonsense proposal.”

Casey took to task Republicans opposing the measure, saying they talk tough on China, but they “cut and run” when it comes to taking on big business.

John Murphy, the U.S. Chamber’s senior vice president for international policy, said existing laws, such as the Export Control Reform Act of 2018 (ECRA), could address the China investment issue, and that the proposal needed more discussion in the Senate before being added to such a sweeping package.

“Congress and the administration should focus on using the legal tools on which the paint is barely dry,” he said, referring to ECRA.

One Senate aide cited fierce opposition to the Casey-Cornyn amendment from businesses and some Republicans, including Senator Mike Crapo, the ranking member on the Senate Finance Committee, adding: “We’re not confident that it’s going to come to a vote.”

Crapo declined to comment.

FUNDAMENTAL FLAW?

Senate Majority Leader Chuck Schumer has sought to get the U.S. Innovation and Competition Act passed this week, but Republicans insist the bill is not ready.

“There is an increasing consensus that the lack of guardrails is the fundamental flaw of the bill,” a Republican House aide said of the Senate package.

The House of Representatives is planning its own version of a China bill and could add other provisions on chips funding as well.

Rubio’s office said it was still working on getting his amendment incorporated. When he proposed his amendment for counterintelligence screening last week, he noted the much needed investments would “mean nothing if they are stolen by foreign adversaries, including the Chinese Communist Party.”

Any restrictions on subsidies to foreign companies would likely benefit Intel Corp, the long-time U.S. national champion in chip-making that has promised to redouble its efforts in the most advanced technologies and spend more than $20 billion on new U.S. plants.

Intel last year moved to sell off its only chip factory in China to SK Hynix.

Derek Scissors, of the conservative American Enterprise Institute, who studies China and security issues, said companies should be forced to make a choice.

“If you receive federal government money, you cannot expand your business in China from that point. The end. And if you don’t like that, don’t take the federal money,” Scissors said.

(Reporting by Stephen Nellis, Michael Martina and David Shepardson; Editing by Richard Chang)

Hong Kong passes sweeping pro-China election rules, reduces public’s voting power

By Sharon Abratique

HONG KONG (Reuters) -Hong Kong’s legislature approved the biggest overhaul of its political system in the quarter century since British rule on Thursday, in a decisive step to assert Beijing’s authority over the autonomous city.

The move was quickly denounced by the United States, which accused China of undermining Hong Kong’s democratic institutions and said decreasing electoral representation of residents of the territory would not foster long-term stability.

The changes will reduce the proportion of seats in the legislature that are filled by direct elections from half to less than a quarter. A new body will vet candidates and bar those deemed insufficiently patriotic towards China from standing.

“These 600-or-so pages of the legislation come down to just a few words: patriots ruling Hong Kong,” said Peter Shiu, a pro-Beijing lawmaker.

Most of the changes were announced by China in March, though Hong Kong authorities later contributed further details, such as redrawing constituency boundaries and criminalizing calls for ballots to be left blank.

The measures were passed with 40 votes in favor and two against. The pro-Beijing government has faced no opposition in the legislature since last year, when China disqualified some pro-democracy lawmakers and others resigned in protest.

Chinese authorities have said the electoral shake-up is aimed at getting rid of “loopholes and deficiencies” that threatened national security during anti-government unrest in 2019 and ensure only “patriots” run the city.

The legislature will increase in size to 90 seats from 70. The number of seats filled by direct election will decrease to 20 from 35. Forty seats will be filled by an election committee, which is also responsible for choosing the chief executive.

The new vetting committee empowered to disqualify candidates will work with national security authorities to ensure those standing are loyal to Beijing.

In a statement, U.S. Secretary of State Antony Blinken accused China of continuing to undermine democratic institutions in Hong Kong and called on Beijing and Hong Kong authorities to release and drop charges against everyone charged under the national security law.

Blinken said altering the composition of the legislature “severely constrains people in Hong Kong from meaningfully participating in their own governance and having their voices heard.”

“Decreasing Hong Kong  residents’ electoral representation will  not  foster long-term political and social stability for Hong Kong,” he added.

Elections for the election committee are set for Sept. 19, and for the legislature three months later. The committee will choose a chief executive on March 27, 2022.

Chief executive Carrie Lam has not made clear whether she will seek re-election. In 2019 she faced the largest and most violent anti-government protests since the handover from British rule in 1997, after proposing a bill to allow extraditions to mainland China.

China had promised universal suffrage as an ultimate goal for Hong Kong in its mini-constitution, the Basic Law, which also states the city has wide-ranging autonomy from Beijing.

Democracy campaigners and Western countries say the political overhaul moves the city in the opposite direction, leaving the democratic opposition with the most limited space it has had since the handover.

Since China imposed a national security law in 2020 to criminalize what it considers subversion, secessionism, terrorism or collusion with foreign forces, most pro-democracy activists and politicians have found themselves ensnared by it or arrested for other reasons.

(Writing by Marius Zaharia; additional reporting by Daphne Psaledakis and David Brunnstrom in Washington; Editing by Peter Graff and Lisa Shumaker)

Biden says U.S. intelligence community divided on COVID-19 origin

WASHINGTON (Reuters) – President Joe Biden on Wednesday said the U.S. intelligence community was divided on the origin in China of the coronavirus that causes COVID-19, including whether it came from human contact with an infected animal or a laboratory accident.

Biden said in a statement that he has called for further investigation into the pandemic’s origins.

He said that U.S. intelligence are looking into two different scenarios, that they do not have high confidence in their current conclusions and that they are divided on which is most likely.

“I have now asked the Intelligence Community to redouble their efforts to collect and analyze information that could bring us closer to a definitive conclusion, and to report back to me in 90 days,” Biden said.

“As part of that report, I have asked for areas of further inquiry that may be required, including specific questions for China.”

U.S. agencies have been aggressively investigating COVID-19’s origins since the U.S. government first recognized the virus as a serious health risk in early 2020.

Earlier this week, U.S. government sources familiar with intelligence reporting and analysis said a still-classified U.S. intelligence report circulated during former President Donald Trump’s administration alleged that three researchers at China’s Wuhan Institute of Virology became so ill in November 2019 that they sought hospital care.

The source of this early intelligence or how reliable U.S. agencies rated it is not known. It remains unclear whether the afflicted researchers were hospitalized or what their symptoms were, one of the sources said. The virus first appeared in Wuhan and then spread worldwide.

Intelligence committees of both the U.S. Senate and House of Representatives are investigating how U.S. agencies have reported on and gathered information about COVID-19’s origin, how it spread and how governments have responded to it.

A report issued by House intelligence committee Republicans earlier this month focused particularly on the Wuhan Institute of Virology.

The Republican report asserted that there was “significant circumstantial evidence raises serious concerns that the COVID19 outbreak may have been a leak” from the institute, suggested the Wuhan lab was involved in biological weapons research, and that Beijing had attempted to “cover up” the virus’ origins.

However, the origin of the virus remains hotly contested among experts.

In a report issued in March written jointly with Chinese scientists, a World Health Organization-led team that spent four weeks in and around Wuhan in January and February said the virus had probably been transmitted from bats to humans through another animal, and that “introduction through a laboratory incident was considered to be an extremely unlikely pathway.”

(Reporting by Trevor Hunnicutt, Mark Hosenball and Timothy Ahmann; Editing by Heather Timmons and Alistair Bell)

China to gift 1 million COVID-19 vaccine doses to Nepal

By Gopal Sharma

KATHMANDU (Reuters) – China will provide 1 million doses of a COVID-19 vaccine to Nepal, its ambassador said on Wednesday, as authorities in the Himalayan country scramble to secure shots amid a surge in infections that has overwhelmed its rickety health system.

The announcement was made during a telephone conversation between Chinese President Xi Jinping and his Nepali counterpart Bidya Devi Bhandari on Wednesday, China’s ambassador Hou Yanqi said in a Twitter post.

In March, China provided 800,000 doses of the Sinopharm COVID-19 vaccine to Nepal, which also received a million shots of the AstraZeneca vaccine as gift from India.

Nepal began its vaccination drive in January but the campaign has been suspended because of the lack of vaccines after New Delhi said it was unable to provide additional shots due to its domestic needs.

China and India jostle for influence in Nepal, a natural buffer between the Asian giants, and both have been giving away COVID-19 vaccines as part of a diplomatic push to strengthen ties with neighbors and countries further afield.

Neither Chinese ambassador Hou nor Nepal’s foreign minister, Pradeep Kumar Gyawali, gave a timeframe for delivery of the latest donation of vaccines.

Nepal has been hit by a sharp surge in COVID-19 cases since early April. The average daily rise in infections is now about 8,000, compared with fewer than 200 a day two months ago, leaving hospital beds, oxygen and medicines in short supply.

In all, the country has reported 535,525 cases and 6,845 deaths from COVID-19, according to government data.

Nepal has also procured 1 million shots of vaccine in a commercial deal with the Serum Institute of India, in addition to 348,000 jabs it received under the COVAX initiative.

The country has administered at least 2,706,835 doses, enough to have vaccinated about 4.7% of the population.

(Reporting by Gopal Sharma; Editing by Devjyot Ghoshal and Alex Richardson)

Human rights activists urge athletes to boycott Beijing Games

(Reuters) – Human rights activists on Tuesday called for athletes to boycott next year’s Winter Olympics in China and put pressure on the International Olympic Committee over the staging of the Games.

Beijing is set to host the Olympics in February 2022, but the IOC has faced criticism over its decision to award the country the Games in light of China’s human rights record.

The calls for a full boycott came ahead of a U.S. congressional hearing at which the Winter Olympics and China’s human rights record were being discussed.

Representatives of the World Uyghur Congress, Tibet Action Institute, China Against the Death Penalty, Students for a Free Tibet and Campaign for Uyghurs told a media conference that continued alleged human rights violations by China meant they had no option but to seek a full boycott.

“There’s still time to make a difference. This does not have to be the end of the story,” said Lhadon Tethong, of the Tibet Action Institute. “Athletes have incredible power and the platform to change the world. If they can speak out for the right of all people to exist, and to live free from fear and repression… that at this point would make a huge difference. We appeal to the athletes to speak out and use their power because they have a lot.”

The IOC did not immediately respond to a Reuters request for comment, but has said in the past that it is a non-political organization and takes allegations of human rights violations very seriously.

“Many of the athletes that we are engaged with are incredible people,” said Julie Millsap of the Campaign for Uyghurs. “I would just ask them to consider what all of these people who are asking for the boycott have lost. This is a horrible position to be in. But this is what’s necessary.”

Activist Zumretay Arkin of the World Uyghur Congress said more than 50 of his relatives had been detained in China.

“We have lost entire families and relatives and friends,” Arkin added. “I urge (the athletes) to put themselves in our shoes. They might lose one Olympic Games but we have lost (our families) for we don’t know how long.

“I think it’s important for them to use the power they have, because athletes are not just puppets that the IOC or governments can just control.”

The Chinese government has denied any human rights violations.

(Reporting by Iain Axon, writing by Simon Jennings in Bengaluru; Editing by Ken Ferris and Dan Grebler)

Mainland China reports first local COVID-19 cases in more than 3 weeks

SHANGHAI (Reuters) -Mainland China reported 12 new COVID-19 cases on Friday, including its first local transmissions in more than three weeks, national and regional authorities said.

Four of the cases were local infections in the eastern province of Anhui, all linked to the same case, surnamed Li. State media reported mass testing being carried out in two cities in the province, Luan and Hefei.

Two of the Anhui cases were reported by the National Health Commission on Friday, having been logged on Thursday.

They were the first local transmissions since April 20, when China recorded two in the southwestern province of Yunnan, where a city on the border with Myanmar reported a new cluster in late March.

China’s official Xinhua news agency said Li had travelled to Anhui on May 1 from Dalian, a port city in China’s northeastern Liaoning province.

The other National Health Commission case, surnamed Zhang, was in close contact with Li during a training class Li led in the city of Luan, Xinhua reported.

Anhui authorities later reported two further locally transmitted cases, both with links to Li. None of the confirmed Anhui cases had been vaccinated, Xinhua cited a local health official as saying.

Two areas in Luan and one part of Feixi county were declared “medium-risk” in response to the cases.

Meanwhile, Liaoning’s provincial health authority reported three new infections, including two local ones, both in another port city, Yingkou.

The other five cases in mainland China, logged on Thursday and reported on Friday, were imported infections originating overseas. The health commission had reported nine cases on Thursday, all imported.

The number of new asymptomatic cases, which China does not classify as confirmed cases, rose to 22 from 14 a day earlier.

The total number of confirmed COVID-19 cases in mainland China stood at 90,815 as of Thursday, while the death toll remained unchanged at 4,636.

(Reporting by Wang Jing, Andrew Galbraith, Roxanne Liu and Lusha Zhang; additional reporting by Tom Daly; Editing by Gerry Doyle and John Stonestreet)

U.S. calls Xinjiang an ‘open-air prison,’ decries religious persecution by China

WASHINGTON (Reuters) -The Chinese government has turned its western Xinjiang province into essentially an “open-air prison,” a U.S. State Department official said on Wednesday as the department published a report that criticized China’s persecution of religious minorities.

Former Secretary of State Mike Pompeo in January said that China’s actions in Xinjiang constitute crimes against humanity and genocide, a verdict his successor, Antony Blinken, has said he agrees with.

China rejects the claim and says it is countering extremism in Xinjiang.

Daniel Nadel, a senior official in the State Department’s Office of International Freedom, said the situation has shifted from the use of what China calls “vocational education and training centers” to detain ethnic Uyghurs and other Muslims, to the use of surveillance “to essentially turn the entire region into an open-air prison”.

“People’s movements are closely tracked. You have minders who have been assigned to live with Uyghurs to keep tabs on them. You have people going to the market who have to check in every time they go to a different market stall,” he said at a press briefing.

The oppression of Muslims was “the culmination of decades of repression of religious adherents” in China, Nadel added.

The State Department report, an annual update on religious freedom around the world, also detailed China’s persecution of the Falun Gong spiritual group.

Blinken announced that he was also imposing a visa ban on Chinese official Yu Hui and his family for Yu Hui’s involvement in arbitrary detentions of Falun Gong followers.

(Reporting by Simon Lewis, Humeyra Pamuk and Doina Chiacu; Editing by Chizu Nomiyama)

Philippines flags ‘incursions’ by nearly 300 Chinese militia boats

MANILA (Reuters) – The Philippines on Wednesday reported what it said were incursions into its exclusive economic zone (EEZ) by 287 maritime militia vessels from China, in a further sign of cracks reappearing in a relationship after a period of rapprochement.

“This incident along with continued illegal incursions of foreign vessels sighted near Philippine-held islands have been submitted to relevant agencies for the possible diplomatic actions,” the task force on the South China Sea said in a statement.

The Philippine foreign ministry has repeatedly complained to China in recent weeks about a “swarming and threatening presence” of Chinese vessels in its EEZ and has demanded they be withdrawn.

The Philippines has recently boosted its presence in the South China Sea through “sovereignty patrols,” in a show of defiance that critics say has been lacking under its pro-China president, Rodrigo Duterte, who has drawn domestic flak for his refusal to stand up to Beijing.

There was no immediate response to a request for comment from the Chinese embassy in Manila.

Experts say China’s fleet fishing boats and coastguard are central to its strategic ambitions in the South China Sea, maintaining a constant presence that complicates fishing and offshore energy activities by other coastal states.

Chinese officials have previously denied there are militia aboard its fishing boats.

Duterte caused a stir last week when he said a landmark 2016 ruling by the Permanent Court of Arbitration that went in the Philippines’ favor in a dispute with China was just a “piece of paper” that he could throw in the trash.

The tribunal also ruled that China’s claims to almost the entire South China Sea where about $3 trillion worth of ship-borne trade passes each year, had no legal basis.

Defense and security analyst Jose Antonio Custodio said Duterte’s comments “cancels-out” the tougher tone being taken with China by his top diplomats and defense chiefs.

“We don’t have unity in messaging,” Custodio said. “That is encouraging China’s actions.”

(Reporting by Karen Lema; Editing by Martin Petty)

America’s mask makers face post-pandemic meltdown

By Timothy Aeppel

(Reuters) – The small U.S. manufacturers that rushed to produce face masks over the past year are now stuck with hundreds of millions of unsold face coverings because China is flooding the market with below-cost masks, and most may not survive the end of the pandemic.

That’s the thrust of a letter to President Joe Biden released Tuesday by a trade group representing 26 small manufacturers that set up production of the badly needed safety items as the health crisis took hold last year.

The manufacturers said over half their production would be forced offline in 60 days if they don’t get immediate federal aid, costing thousands of jobs. They blame low-priced imports, especially from China.

“We write to you with a request for immediate help against unfair trade practices by foreign nations that threaten the viability of the U.S. domestic PPE mask manufacturing industry, as well as future U.S. pandemic preparedness efforts,” the newly formed group, the American Mask Manufacturer’s Association, said in the letter.

The group said they have capacity to produce 3.7 billion surgical masks and more than 1 billion of the higher-protection N95 masks a year – and are now sitting on stockpiles of 260 million surgical masks in their warehouses that they are struggling to sell. Another 20 million N95s are also on factory shelves.

When masks were in short supply last year, prices surged. But prices have now crashed, and hospital administrators and others are shopping for the best prices in a market crowded with new offerings.

A box of 50 surgical masks which sold for more than $50 a year ago can be found for $5 now.

The trade group said while there are 3 to 6 cents in raw material in every surgical mask, imported Chinese surgical masks now sell for an average of 1 cent each. “China … is effectively dumping masks on the U.S. market at well below actual costs.”

“If this remains unchanged, 54% of our production will go offline in 60 days and 84.6% in less than a year,” the group said in the letter. The group said they’d created more than 7,800 U.S. jobs in the last year, but roughly a third of those have already been lost to production cuts.

PROTECTING PRODUCERS

The Biden administration has pledged to look at ways to support domestic producers of protective equipment – including potentially finding ways to subsidize U.S. producers – but the government reviews are still underway.

“The idea that everyone expressed during the crisis – that we need to avoid (PPE shortages) ever happening again – hasn’t changed profit-driven institutions,” said James Wyner, chief executive of Shawmut Corp., a West Bridgewater, Massachusetts, maker of engineered materials that expanded into mask production during the crisis. “The distributors are still sourcing their stuff at the lowest price.”

Wyner said he’s selling masks from his new production lines, but “substantially less than we would like.”

Adam Albrecht, senior quality control manager at Indiana Face Mask, another small producer, said when the firm first started producing the higher-filtration N95 masks last year, “People came out of the woodwork, saying: ‘We can sell this, we can sell this.’ But it seems no matter how much we adjust prices down, the Chinese stay just below.”

Some of the small mask makers are confident they will survive.

Dan Izhaky, who together with a partner has invested $4 million in a new mask factory outside Los Angeles, said the challenge is greater for makers of surgical masks, the ubiquitous safety masks that are relatively easy to make. Izhaky’s company makes more complex N95 masks and he said he has continued to expand. “But we also believe the Biden administration is going to take a number of steps down the road to really help us be sustainable,” he said.

The mask trade group – which doesn’t include industry giants such as 3M Co. and Honeywell International Inc. – urged the Biden administration to take immediate action to support the industry.

Their recommendations include requiring the federal government and any other institution receiving federal dollars for buying protective equipment to buy only U.S.-made masks that comply with government rules on domestic content and remove any masks in the federal stockpile that don’t meet federal standards. They also want the administration to require any hospital that accepts federal funds to earmark 40% of its spending on PPE for domestic producers by 2023.

They are also asking the government to consider buying the 260 million masks now stockpiled at the new factories.

(Reporting by Timothy Aeppel; Editing by Dan Burns and Andrea Ricci)

G7 scolds China and Russia over threats, bullying, rights abuses

By William James, Guy Faulconbridge and Elizabeth Piper

LONDON (Reuters) – The Group of Seven scolded both China and Russia on Wednesday, casting the Kremlin as malicious and Beijing as a bully, but beyond words there were few concrete steps aside from expressing support for Taiwan and Ukraine.

Founded in 1975 as a forum for the West’s richest nations to discuss crises such as the OPEC oil embargo, the G7 this week addressed what it perceives as the biggest current threats: China, Russia and the coronavirus pandemic.

G7 foreign ministers, in a 12,400-word communique, said Russia was trying to undermine democracies and threatening Ukraine while China was guilty of human rights abuses and of using its economic clout to bully others.

There was, however, little concrete action mentioned in the communique that would unduly worry either Chinese President Xi Jinping or Russian President Vladimir Putin.

The G7 said it would bolster collective efforts to stop China’s “coercive economic policies” and to counter Russian disinformation – part of a move to present the West as a much broader alliance than just the core G7 countries.

“I think (China is) more likely to need to, rather than react in anger, it is more likely going to need to take a look in the mirror and understand that it needs to take into account this growing body of opinion, that thinks these basic international rules have got to be adhered to,” British Foreign Secretary Dominic Raab said.

Russia denies it is meddling beyond its borders and says the West is gripped by anti-Russian hysteria. China says the West is a bully and that its leaders have a post-imperial mindset that makes them feel they can act like global policemen.

China’s spectacular economic and military rise over the past 40 years is among the most significant geopolitical events of recent history, alongside the 1991 fall of the Soviet Union that ended the Cold War.

XI AND PUTIN

The West, which combined is much bigger than China and Russia economically and militarily, has struggled to come up with an effective response to either China or Russia.

“We will work collectively to foster global economic resilience in the face of arbitrary, coercive economic policies and practices,” the G7 ministers said on China.

They said they supported Taiwan’s participation in World Health Organization forums and the World Health Assembly – and expressed concerns about “any unilateral actions that could escalate tensions” in the Taiwan Strait.

China regards Taiwan as its own territory and opposes any official Taiwanese representation on an international level.

On Russia, the G7 was similarly supportive of Ukraine but offered little beyond words.

“We are deeply concerned that the negative pattern of Russia’s irresponsible and destabilizing behavior continues,” G7 ministers said.

“This includes the large build-up of Russian military forces on Ukraine’s borders and in illegally-annexed Crimea, its malign activities aimed at undermining other countries’ democratic systems, its malicious cyber activity, and (its) use of disinformation.”

VACCINES

On the coronavirus pandemic, the G7 pledged to work with industry to expand the production of affordable COVID-19 vaccines, but stopped short of calling for a waiver of intellectual property rights of major pharma firms.

“We commit to working with  industry  to facilitate expanded manufacturing at scale of affordable COVID-19  vaccines, therapeutics and diagnostics and their component parts,” the G7 foreign ministers said in a joint statement.

They said the work would include “promoting partnerships between companies, and  encouraging voluntary licensing and tech transfer agreements on mutually agreed terms”.

(Additional reporting by Alistair Smout; Writing by Guy Faulconbridge; Editing by Mark Heinrich)