On April 25, 2024, U.S. President Donald Trump announced the introduction of 'reciprocal tariffs,' a policy aimed at imposing varying tariff rates on all trade partners, which includes a proposed 34 percent tariff on Chinese imports.

While the semiconductor industry, previously under significant scrutiny during trade negotiations, was excluded from this recent list, prior policies have already imposed a substantial 50 percent tariff on Chinese semiconductors, set to take effect in January 2025.

In response to increasing U.S. technological restrictions, which began in 2018, over 2,000 Chinese entities operating within pivotal areas such as artificial intelligence, quantum computing, semiconductors, and aerospace have been placed on the U.S. “Entity List.” Despite these constraints, Chinese technology enterprises have shown remarkable resilience, drawing on self-developed technological frameworks and diversified global supply chains.

In 2024, China's semiconductor industry marked important achievements, with the General Administration of Customs reporting chip exports reaching 298.11 billion units and an export value of $159.5 billion, reflecting an 18.7 percent increase compared to the previous year.

This growth highlights the sector's ability to adapt amidst external pressures.

Parallel to advancements in semiconductors, China’s global trade infrastructure has evolved significantly.

As of May 2024, the Ministry of Commerce reported that the nation established over 2,500 overseas warehouses, encompassing more than 30 million square meters.

This expansion indicates China's efforts to enhance its logistic capabilities and global reach.

Investments in fundamental research are yielding competitive advantages for China.

According to data from the Ministry of Science and Technology, spending on basic research has risen to 8.3 percent of the total research and development budget in 2024. These investments are critical as they fortify the backbone of advanced technologies.

Despite these advances, the introduction of new U.S. tariffs raised concerns among leading economists regarding potential destabilization of domestic industries and broader implications for the global economy.

Fragmentation in global trade and economic systems has prompted analyses suggesting that China must consider a phased strategy towards technological self-sufficiency.

A report from the Zhejiang Institute of Industry and Information Technology proposes that the semiconductor sector should prioritize establishing an independent supply chain for the mature 28-nanometer process, which includes essential components such as EDA tools and photoresists.

Moreover, advancements in chiplet packaging technology are recommended to boost performance.

However, the report cautions against falling into the 'self-sufficiency trap,' which might result in losing out on opportunities for technological collaboration and integration.

It advocates for a strategy of 'open-source innovation' to draw in global intellectual resources, thereby fostering a more collaborative technological landscape.