Holding back China’s chipmaking progress is a fool’s errand, says U.S. Commerce Secretary

U.S. Secretary of Commerce Gina Raimondo said in an interview that the country should focus more on investments in domestic innovation than applying bans and sanctions. “Trying to hold China back is a fool’s errand,” said the politician. She also added that the Biden administration’s CHIPS and Science Act, which led the country to spend more money on building out its chip infrastructure than the past 28 years combined, “matters more than export controls.” Nevertheless, the Wall Street Journal says President Biden still pushed for bans and sanctions against Chinese firms and even urged its allies, including the Netherlands and Japan, to stop China from acquiring advanced tech, especially those containing American tech.

“The only way to beat China is to stay ahead of them,” said Sec. Raimondo. “We have to run faster, out innovate them. That’s the way to win.” Despite the various export controls that the U.S. has applied against several Chinese companies, many of its companies are still able to procure banned chips through the black market and unofficial conduits. Aside from that, Chinese innovation is seemingly continuing, with many businesses and organizations forced to be creative in pursuing their goals despite the roadblocks posed by American sanctions.

Sec. Raimondo said these statements in the interview as President Trump is about to return to the White House in early 2025. The CHIPS and Science Act had bipartisan support when it passed Congress, and some states that are Republican strongholds have seen the benefits of the federal government’s investments. However, the incoming President was quoted saying in October, “That chip deal is so bad.” Instead of direct government funding, Trump spokesman Kush Desai said that he prefers “enacting tariffs, cutting taxes, slashing regulations, and unleashing American energy.”

Because of the uncertainty about the future of the CHIPS Act, many subsidy applicants are rushing to get their funding in place before January 20. Nevertheless, Trump plans to expedite permits for any company that plans to invest at least a billion dollars in the U.S., with some regulations and reviews potentially getting waived. This is likely the reason why SoftBank plans to invest $100 billion in AI and other technologies in the country. But even if Sec. Raimondo agrees that some regulations hold back the competitiveness of American industry, she still believes that Washington shouldn’t let companies act with impunity, even if they have a huge war chest.