U.S. Trade Representative Katherine Tai testified to the House Ways and Means Committee March 30 about the state of Chinese-U.S. trade, noting that China's failings in agreements like the "Phase One Agreement" fits "a familiar pattern."
She noted that it is "clear that China would only comply with those trade obligations that fit its own interests."
The U.S. Senate cracked down on the market after passing the United States Innovation and Competition Act (USICA) on March 28. Among other features it has "a focus on China," and if reconciled would boost domestic production of semiconductors.
Tai noted that the door is open to continued dialogue with China, but that the U.S. needs to "acknowledge the [Phase One Agreement's] limitations and turn the page on the old playbook with China, which focused on changing its behavior."
She added, "Instead, our strategy must expand beyond only pressing China for change and include vigorously defending our values and economic interests from the negative impacts of the PRC’s unfair economic policies and practices."
She also emphasized the importance of manufacturing semiconductor products in the United States. The observation was followed by the announcement that the industry is projected to experience an acceleration.
Kai went on to note the negative impact that China's focus on steel and solar manufacturing has had, and that China is turning its attention to sectors like electric vehicles, batteries and semiconductors. She noted that steps are being taken for the U.S. to remain competitive, like working with other countries negatively impacted by aggressive and unfair trade and economic policies.
The tensions are a cause of concern considering China and East Asia manufacture 75% of all semiconductors used globally, Newsweek reported earlier this year. Semiconductor chips are a critical component of cars, planes, computers and mobile devices.
A McKinsey article published a few days after the passage of USICA noted, "The global semiconductor industry is poised for a decade of growth and is projected to become a trillion-dollar industry by 2030."
Based on the firm's analysis, the industry’s aggregate annual growth could average from 6% to 8% a year up to 2030. This assumes, of course, that the volatility in the market settles down and that there is an average price increase of around 2% per year.
McKinsey predicts that 70% of growth in the industry will stem from just three industries: automotive, computation and data storage and wireless. Among the three, automotive is expected to be the strongest as cars that are increasingly computerized and autonomous will continue to grow.
McKinsey advises industry leaders to focus on "R&D, factories and sourcing, and to apply the lessons of the modeling to unlock areas of opportunity."