(JW Insights) Feb 20 -- If the US export controls on China’s semiconductor trade under the guise of security are expanded without control, the free trade system could collapse, Japanese newspaper Mainichi's editorial pointed out on February 17.

Last year, the U.S. imposed a broad ban on semiconductor trade with China. It also asked Japan and the Netherlands, which are home to leading semiconductor equipment manufacturers, to agree to the ban in order to contain such production in China.

The concerns of Japan, the U.S. and Europe are that China's military technology will become even more advanced through the improvement of artificial intelligence.

However, many advanced technologies are used in digital society without distinction between civilian and military use, said the report.

The impact on Japan’s economy must also be considered. Since approximately 30% of semiconductor manufacturing equipment exported from Japan is destined for China, the impact on companies and investors would be significant.

If controls were imposed, a backlash from China would be unavoidable. Restrictions could trigger countermeasures from China, such as an embargo on exports of rare metals and other important commodities. This could threaten the world economy with turmoil and stagnation.

There is a need to strike a balance between security and economic activities so as not to undermine the benefits of the free trade regime. What is required of Japan, which stands between the U.S. and China, is a multilayered strategy to rebuild the trade order, according to Mainichi.

(Yuan XY)