US: Chip sales to continue to China, but not most powerful ones

U.S. Commerce Secretary Gina Raimondo speaks during a meeting with her Chinese counterpart Wang Wentao, unseen, at the Ministry of Commerce in Beijing, Aug. 28, 2023. [AP Photo]

The United States will continue to sell semi-conductor computer chips to China but not its most powerful ones "that China wants for its military," Commerce Secretary Gina Raimondo said Sunday.

The U.S. is "never going to sell our most powerful [artificial intelligence] chips" to China, Raimondo told CNN's "State of the Union" show.

Raimondo, who met in Beijing recently with Chinese officials on a range of U.S.-Chinese business and trade issues, recapped her sometimes contentious discussions in a string of talk show interviews.

Raimondo said she told Chinese officials that she knew Beijing had hacked her email in advance of her late August trip.

"They did hack me, which was unappreciated, to say the least," she told NBC's "Meet the Press."

On CNN, she said, "They suggested that they didn't know about it and they suggested that it wasn't intentional. But I think it was important that I put it on the table and let them know and let them know that it's hard to build trust when you have actions like that."

Raimondo said she told Chinese officials they were making it more difficult for American companies to do business there.

"I was very clear with China that we need to - patience is wearing thin among American business," Raimondo told CBS's "Face the Nation" show. "They need and deserve a predictable environment and a level playing field. And hopefully China will heed that message so we can have a stable growing commercial relationship."

Taiwan chip industry emerges as battlefront in US-China showdown

While the United States and China maintain more than $700 billion in annual trade, escalating tensions in recent years have made it more challenging for U.S. firms to operate in China.

Raimondo said U.S. firms face unexplained large fines, raids on businesses and changes to a counterespionage law.

Raimondo said that as China's economy has slowed in recent months, its government has "become more arbitrary in the way they administer regulations; the economy is quite challenged."

"I brought up many of our grievances on behalf of our national security concerns, concerns of U.S. labor, concerns of U.S. business. Didn't pull any punches," she told NBC. "It's a complicated relationship. There's no doubt about it. We are in a fierce competition with China at every level."

The United States and China are the world's two biggest economies.

"All of that being said, we have to manage this competition," she said. "Conflict is in no one's interest. We need to manage the competition responsibly. That's good for America. That's good for the world."

"And in that respect, I think our commercial relationship, which is very large and growing, and underpins hundreds of thousands of U.S. jobs, our commercial relationship, if stable, can be kind of a ballast for the entire relationship," she said. "And anything we do that can create stability is, in fact, good for the American people."

Chinese Premier Li Qiang told Raimondo during her trip that "sound economic relations and trade cooperation will not only be beneficial to our two countries, but to the whole world."

As it stands now, the U.S. imports much of its semiconductor chips used in the manufacture of high-tech products from Taiwan, the self-governed territory that China considers a wayward province. Beijing has never ruled out the use of military force to take full control and Washington has been supplying Taiwan with military weaponry to defend itself against any prospect of an invasion.

Raimondo said the U.S. is on track by the end of the decade to "have a large, deep, best-in-the-world semiconductor ecosystem.... We already lead the world in design of semiconductors. You can see that with the AI chips. We lead the world in software."

But she added, "We need to get back into the business of actually manufacturing leading-edge chips here and packaging leading edge chips here. And yes, we will, by the end of this decade, have regained prominence and have that deep ecosystem, including research and development, here in the U.S."