U.S. prevents Dutch ambassador from selling lithography machines to China

U.S. prevents Dutch ambassador from selling lithography machines to China

The Dutch government has not yet made a final decision on approving the export of extreme ultraviolet lithography machines (EUV) from China by Dutch semiconductor supplier giant Asml (ASML). The media has widely reported that since 2018, the United States has repeatedly pressured the Netherlands to prevent ASML from exporting lithography machines to China, which has caused the Netherlands to be indecisive. EUV lithography machine is the most important core component in semiconductor manufacturing, and the key technology of this equipment has been monopolized by ASML company.

In response, Xu Hong, the Chinese ambassador to the Netherlands, responded in an exclusive interview with the main Dutch newspaper, the Financial Daily, which was published on the front page of the media on the 15th. Xu Hong said that if the report is true, that is, the Dutch government is under pressure from the United States to no longer approve the export of EUV lithography machines to China. This approach is typical of politicizing commercial issues. The cooperation between ASML and Chinese companies is purely a cooperation between technology companies. According to relevant laws and international agreements, the United States has no reason to require the Netherlands to restrict ASML’s exports to China.

If the Dutch government follows the United States in its policy orientation and imposes unfair restrictions on China-Dutch economic and trade exchanges for political reasons, it will undoubtedly affect cooperation between the two countries. Moreover, this matter has caused widespread concern in China, and the Chinese people are worried that this will have an adverse impact on China-Dutch and China-Europe trade in the future.

Xu Hong expressed the hope that the Dutch government can eliminate political factors or external pressure interference, and from the perspective of mutually beneficial cooperation between China and the Netherlands, comprehensively consider its own and corporate interests and make correct judgments in the spirit of fair trade and the rule of law.

Xu Hong said that not only on the issue of EUV lithography machines, but also on the issue of Chinese companies participating in the construction of 5G networks in the Netherlands, the United States has raised so-called “national security” concerns. This is an excuse without any factual basis. The rationale is that as long as it is a product made in China, there is a “national security” risk. “China has never directed any company in its country to install a backdoor to steal foreign intelligence information. China has opposed this approach. China has not done it in the past and will not do it in the future.”

On the 16th, the official website of the Chinese Embassy in the Netherlands released an interview with Xu Hong. During the interview, Xu Hong also made detailed responses to issues such as network security and intellectual property protection. The “Financial Daily” report was also widely reposted by mainstream media such as the Telegraph, the New Rotterdam Business Daily, the Common Daily, and the Dutch National Broadcasting Corporation.

Reporter: The recent news hotspot is that the United States has put pressure on the Netherlands to prevent the Netherlands from exporting EUV lithography machines produced by ASML to China. What is your opinion on this?

Ambassador Xu Hong: We have also noticed some recent reports. In fact, there was similar news at the end of last year. As far as we know from the Dutch government, the Netherlands has not yet made a final decision. This incident has caused widespread concern in China, and the Chinese people are worried that this incident will have an adverse impact on China-Dutch and China-EU trade in the future. If the report is true, that is, if the United States pressures the Netherlands and the Dutch government no longer approves the export of EUV lithography machines to China, then this approach is typical of politicizing business issues. According to relevant laws and international agreements, the United States has no reason to require the Netherlands to restrict ASML’s exports to China. The cooperation between ASML and Chinese enterprises is purely a cooperation between technology companies. We are happy to see that ASML has continued to expand in the Chinese market in recent years. In the era of globalization, industries are closely connected; cutting off one of them will bring a series of chain reactions, especially the semiconductor industry. China is the world’s largest semiconductor product market, accounting for more than 50% of total global semiconductor product consumption. If the United States interferes in the normal business dealings between China and the Netherlands, it will have an adverse impact on the development of the global semiconductor industry, and will eventually hurt the interests of the United States’ own companies and consumers. ASML technology in the Netherlands is very advanced and in a global leading position, but any product and technology cannot be separated from market support. Losing the Chinese market not only hurts the interests, but also lacks an important platform for product technology improvement and development. ASML itself will not be willing to do so.

We have also noticed that the rules-based international trading system is being severely impacted by the United States taking a series of negative measures. China and the Netherlands share common interests and positions in safeguarding free trade and multilateralism. It is hoped that the Dutch government will be able to rule out interference and make the right decisions independently and on the principles of rationality and the rule of law.

Reporter: You mentioned the important position of ASML in the semiconductor industry, and you think that politicizing economic issues will have an adverse impact on the global semiconductor industry. If the Dutch government obeys the United States and does not approve EUV lithography machine export licenses, will other products exported by ASML to China be affected?

Ambassador Xu Hong: ASML’s series of products exported to China involve many details, which should be a problem discussed between relevant companies in China and the Netherlands. For EUV lithography machines that require the Dutch government’s approval for export, we hope that the Dutch government will consider its own interests and the interests of Dutch companies and make correct judgments in the spirit of fair trade and the rule of law.

Reporter: Have you expressed these concerns to the Dutch government?

Ambassador Xu Hong: Our position is very clear to the Dutch government. We have repeatedly expressed the concern that Sino-Dutch trade should not be disturbed by political factors on different occasions.

Reporter: But the United States has always reminded the Netherlands that the EUV lithography machine trade will bring “security risks”. What is your opinion on this?

Ambassador Xu Hong: Not only on the issue of EUV lithography machines, but also on the issue of Chinese companies participating in the construction of 5G networks in the Netherlands, the United States has raised the so-called “national security” concerns. This is an excuse without any factual basis. The rationale is that as long as it is a product made in China, there is a “national security” risk. Without any evidence, they linked business issues with China’s system, ideology, and the leadership of the Communist Party of China, saying that if China implements a socialist system and one-party dictatorship, dealing with China will certainly involve risks. They keep repeating that. But you see, there are so many troubles in the world, wars continue in some places, people are displaced in some places, and terrorist activities in some places are rampant. Which of these troubles is caused by China? On the contrary, China has always been a promoter and builder of world peace.

The United States has accused China of cybertheft through its own companies. But who is the biggest black hand behind cyber theft? Everyone knows it. Our statistics show that China is the biggest victim of cyber theft. In 2018, more than 14,000 Trojan or botnet control servers located in the United States controlled more than 3.34 million computer hosts in China. This is an increase of more than 90% from the previous year. In 2018, more than 3,000 IP addresses in the United States implanted Trojans into more than 3,600 websites in China, an increase of 43% over the previous year. China is the first to be attacked frequently by US organizations on foreign computers. You’ve all heard of the “Prism” project, and knowing something about Snowden’s disclosure, I need not say more. China has always attached importance to cyber security issues and resolutely opposes cyber attacks and cyber theft. Instead, the United States has beaten it down, making rumors everywhere, and continually carrying out slanderous attacks on China.

Reporter: Do you mean that China does not engage in cyber theft activities? The series of actions you alleged in the United States have nothing to do with China?

Ambassador Xu Hong: The Chinese government’s position has always been clear. China has never directed any company in its country to install a backdoor to steal foreign intelligence. China opposes this approach. China has not done it in the past and will not do it in the future. The Chinese Premier and other government officials have repeatedly emphasized on various occasions. As far as I know, the United States does require domestic companies to provide data information stored overseas. Take Google ’s data center in the Netherlands as an example. Under US law, it is obliged to provide the data it holds to the US government. China has repeatedly opposed this approach. In the absence of any evidence, the United States asserts that it will do the same for China, which cannot withstand scrutiny.

Reporter: Dutch lawmakers and technology companies are worried that China’s intellectual property protection work is not enough, and the intellectual property protection law needs to be improved. Can you talk about this?

Ambassador Xu Hong: In this regard, I have asked many entrepreneurs operating in China and asked them if they have encountered any intellectual property issues in China. The vast majority of them said that they had not encountered any problems and expressed appreciation for China’s progress in protecting intellectual property rights. It is not ruled out that there will be some cases involving intellectual property rights of enterprises being processed by the courts, but most of the evaluations we have heard are positive. China attaches great importance to the protection of intellectual property, and the level of intellectual property protection is gradually increasing.

Reporter: Why is China committed to improving intellectual property protection? From the outside world, China has benefited more from an imperfect intellectual property protection system.

Ambassador Xu Hong: Only by improving the level of intellectual property protection can innovation and competition be better encouraged. The acquisition of intellectual property rights by improper means cannot be sustained. In fact, China is now a big country in innovation, and our number of intellectual property rights leads the world. In 2018, the number of Chinese invention patent applications reached 1.542 million, ranking first in the world for 8 consecutive years. Among them, there were 148,000 invention patents filed abroad in China. 5G technology is composed of a series of patented technologies. Among them, the necessary patents of Huawei account for more than 20%, and Chinese companies together account for more than 30%. This shows that China is doing very well in the field of intellectual property. 

We are still working to improve intellectual property laws. Last year we passed the Trademark Law and the Anti-Unfair Competition Law to strengthen protection of trademarks and trade secrets. Next, we need to amend the Copyright Law and the Patent Law to further improve the level of intellectual property protection. In the past, the compensation for intellectual property infringement in China was relatively low. After amending the relevant regulations, a punitive compensation mechanism with a maximum compensation of 5 times the amount involved in the case will be introduced, and the upper limit for compensation for trademark and patent infringement will be raised to 5 million yuan. The newly passed Foreign Investment Law explicitly prohibits compulsory technology transfer. In terms of judicial protection, the Supreme People’s Court has established special intellectual property courts, and Beijing, Shanghai, Guangzhou and other places have also established intellectual property courts. In general, China’s intellectual property protection is getting stronger.

Reporter: You mentioned that the upper limit of compensation for infringement is 5 million yuan. By Western standards, the standard of 5 million yuan is still low. I saw ASML claiming as much as $ 800 million in a tort case. What is your opinion on this?

Ambassador Xu Hong: Regarding the actual loss of intellectual property rights infringement, the calculation method prescribed by the laws of different countries is different. You talked about western standards just now. In fact, the standards of western countries are different. There is no unified global standard. The United States and the Netherlands have different standards. Therefore, when discussing the issue of recognition and enforcement of intellectual property judgments of foreign courts internationally, there are huge differences in the determination of punitive damages and no agreement can be reached. All other countries, including Europe, have reservations about high US compensation. In addition, the protection of intellectual property rights cannot rely solely on punitive damages. There are many other tasks that can be done to prevent intellectual property infringements.

Reporter: Some people worry that although China’s laws and regulations have improved, law enforcement needs to be strengthened. What is your opinion on this?

Ambassador Xu Hong: In order to ensure the implementation of laws, China’s law enforcement has been increasing. What do you mean by worrying only about this doubt, or is there any company that won the case in China and failed to enforce the verdict? If it is the latter, you can tell us and we can get to know the situation. But if it is just worry, I don’t think it is necessary.

Reporter: Another news is that the Dutch car manufacturer VDL failed in a bid for a pure electric bus in the Netherlands and lost to the Chinese company BYD. The president of VDL submitted a report to me, saying that BYD has received funding from the Chinese government and there is unfair competition.

Ambassador Xu Hong: I have taken note of the relevant comments from the VDL in the Netherlands. The VDL bid was unsuccessful and somewhat unhappy, which was a natural response. But if you want to blame unfair competition, you must speak the facts. The bidding, tendering and bidding were carried out by the relevant Dutch authorities in accordance with Dutch local law. VDL has made a great contribution to Dutch transportation. Although BYD has received orders for 259 pure electric buses, it still only accounts for 16% of the market and VDL still accounts for nearly 70%.

He referred to the issue of subsidies given to Chinese enterprises by the Chinese government, which is an incorrect understanding. Granting certain subsidies to high-tech companies is a common practice in various countries. After China’s entry into the WTO, it has effectively fulfilled the requirements of the WTO Agreement on Subsidies and Countervailing Measures, not only eliminating the prohibition subsidies, but also strictly observing the WTO subsidies Has submitted thousands of notifications to the WTO. If there are still questions, they can be resolved through the WTO dispute settlement mechanism. It should also be noted that the subsidy provided by the Chinese government to high-tech enterprises is not limited to state-owned enterprises or domestic enterprises. Foreign companies investing in China can also enjoy the same subsidies if they meet the conditions. Take the new energy vehicle subsidy, which is only for the Chinese market, and Tesla’s pure electric cars produced in China also enjoy subsidies.

Reporter: The current tide of protectionism is prevailing. This kind of voice in the Netherlands is rising. If the Dutch government, like the United States, also adopts a national priority policy to protect local companies, what do you think?

Ambassador Xu Hong: I don’t think the Dutch government will do this. The Netherlands has always advocated free trade and fair competition. The Netherlands has world-leading technology and products in many fields, and I have full confidence in the Netherlands. As long as it is fair competition, Dutch companies have great advantages. Of course, it is not necessary to say that all Dutch products can win the competition. This is not necessary. Protectionism is not conducive to scientific and technological progress and enterprise development.

Reporter: Assuming that the Dutch government permanently bans the export of EUV lithography machines to China, what countermeasures will China take?

Ambassador Xu Hong: Of course I hope that the Dutch government can handle related matters based on the principles of fairness, non-discrimination and the rule of law. We do not want the Dutch government to refuse to export because of political reasons or due to external pressure. We hope that the Netherlands can rule out interference and make a decision from the perspective of mutually beneficial cooperation between China and the Netherlands.

Reporter: ASML export licenses are pending, and the Dutch government has decided not to allow Huawei to participate in the construction of the 5G network core network. It seems that the Netherlands tends to listen to the United States rather than China. What do you think for this?

Ambassador Xu Hong: Whether it is Huawei’s problem or EUV lithography machine, the most important thing is to maintain the spirit of free trade and create a fair, just and non-discriminatory business environment. The Dutch government must consider various factors when making decisions. I hope the Netherlands can believe that China will definitely not be a party that poses a threat to Dutch national security. Leaders of the two countries have already announced that the two sides will establish an “open and pragmatic comprehensive cooperative partnership.” As a partner, we hope to cooperate with the Netherlands for win-win and common development and progress.

Reporter: So how do you plan to win more trust from the Netherlands?

Ambassador Xu Hong: Actions speak louder than words. The most important thing is action. With more exchanges and cooperation, trust naturally increases. In the past few months, I have been in contact with many Dutch people, and anyone who has been to China has basically taken a positive view of China-Dutch relations. Although we have encountered some difficulties temporarily, I still have confidence in the future.

Reporter: Back to the topic of the semiconductor industry. The United States discourages China by blocking economic cooperation between China and the EU. What do you think of the United States’ use of Europe as a tool to combat China?

Ambassador Xu Hong: Many practices of the current US government are beyond the norm. While the United States provoked a Sino-U.S. Trade war, it also provoked trade disputes with Europe; the United States also withdrew from many important international treaties, mechanisms, and organizations, such as the Paris Agreement; The rules-centric multilateral trading system has been greatly affected. Some senior U.S. officials have traveled around the world to speak ill of China, exhausted offensive language and lacked evidence. Dealing with the United States is difficult now and requires more patience and wisdom from all countries. Regardless of the behavior of individual countries, China and the Netherlands and China and Europe share common interests in maintaining multilateralism, maintaining free trade, and maintaining a multilateral trade mechanism with the WTO at its core. We should strengthen communication and coordination and unswervingly maintain multilateralism and fairness and justice.

Reporter: Back to the topic of ASML. Why is ASML’s product export issues so important to China?

Ambassador Xu Hong: If the relevant reports are true, this is a continuation of the United States’ continued political suppression in China in recent years. When it comes to Huawei’s participation in 5G construction in European countries, senior U.S. officials will lobby and even intimidate every time they visit a country, and for some unreasonable reasons they will not be allowed to cooperate with Huawei. The real intention of the United States to do so is obvious to everyone, and it is obviously to block China in science and technology and curb its development. The export of ASML products to China is an example of cooperation between China and the Netherlands in the field of science and technology. Chinese people are very concerned about what the Netherlands will make under the pressure of the United States. It may be a weather vane.

Reporter: ASML is extremely important to the Netherlands, and the Dutch media reports a lot. For China, this is just another example of the US technology blocking China, or will it lead to an escalation of Sino-US conflict or other serious consequences?

Ambassador Xu Hong: We look at this issue from the perspective of relations between the two countries, not just a product of ASML. Whether ASML is allowed to export lithography machines to China is not a simple technical issue. This involves the future policy orientation of the Dutch government. We are very concerned about this. For the Netherlands, ASML is extremely important. For China, ASML also maintains a good cooperative relationship with China, and it hopes to expand the Chinese market. If this desire is frustrated, it will also be a big blow for ASML.

Reporter: You mentioned that if the Dutch government does not issue export permits, it will affect China-Dutch relations. Can you explain the specific impact?

Ambassador Xu Hong: First of all, we still hope to avoid this situation. If the Dutch government follows the United States in its policy orientation and imposes unfair restrictions on China-Dutch economic and trade exchanges for political reasons, it will undoubtedly affect cooperation between the two countries. Because all cooperation should be reciprocal.

I would also like to ask, how do you think the Dutch media and companies think about ASML? Do they want ASML to stop doing business with China, or do they continue to do business with China on a fair basis?

Reporter: It’s hard to say, but many Dutch high-tech departments are worried about the Dutch government’s intervention in ASML, and they are worried that the Dutch government will give in to the United States, because the threat that the United States preaches is not so serious in the Netherlands after all.

Ambassador Xu Hong: The United States has repeatedly emphasized that it has security concerns about Chinese products or cooperation with China, but China has repeatedly stated that China will not threaten the security of the Netherlands. We have always been very good partners. The exchanges between the two countries have been for more than 400 years History.

SaDaM Khakwani

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