U.S. blocks Dutch sale of photolithography machine to China, Chinese ambassador says

The Dutch government has yet to make a final decision on approving the export of ultra-violet lithographers (UVVs) to China by Dutch semiconductor supplier giant ASML. Media reports have been widely reported that since 2018, the United States has repeatedly pressured the Netherlands to prevent ASML from exporting photolithography machines to China, leading to uncertainty in the Netherlands. EUV lithography is the most important core component in semiconductor manufacturing, and the key technology of this equipment has been monopolized by ASML.

In response, Xu Hong, China’s ambassador to the Netherlands, responded in an interview with the main Dutch newspaper, the Financial Daily, which was published on the front page of the newspaper on the 15th. Xu Hong said that if the reports are true, that is, the Dutch government under pressure from the United States to stop approving the export of EUV photolithography machines to China, this is typical of politicizing business issues. ASML’s cooperation with Chinese enterprises is purely a collaboration between technology enterprises. Under applicable laws and international agreements, the United States has no reason to ask the Netherlands to restrict ASML exports to China.

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

Xu Hong expressed the hope that the Dutch government can eliminate political factors or external pressure interference, from the perspective of mutually beneficial cooperation between China and the Netherlands, comprehensive consideration of their own and the interests of enterprises, in the spirit of fair trade and the rule of law, to make a correct judgment.

Xu Hong said that not only on the issue of EUV lithography machine, including the participation of Chinese enterprises in the construction of the Dutch 5G network, the United States has raised so-called “national security” concerns. This is an excuse that has no basis in fact. The rationale is that as long as products made in China are produced in China, there is a risk of “national security”. “China has never instructed any of its companies to install backdoors to steal foreign intelligence information. China has always opposed this practice. 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 published a transcript of Xu Hong’s interview. In the interview, Xu also made a detailed response to issues such as network security and intellectual property protection. The financial daily’s coverage has also been widely retweeted by the Telegraph, the New Rotterdam Business Daily, the Common Daily, the Dutch National Broadcasting Corporation and other Dutch mainstream media.

U.S. blocks Dutch sale of photolithography machine to China, Chinese ambassador says

Financial Daily reports on the ambassador’s interview in two full-page pages (including front-page headlines) from the Chinese Embassy in the Netherlands (below)

The interview is recorded as follows:

Reporter: The latest news hot spot is the U.S. pressuring the Netherlands to stop the Netherlands from exporting EUV photolithography machines made by ASML to China. What do you think of this?

Xu Hongxuan: Some recent reports have also taken note. In fact, there was similar news at the end of last year. As far as we know from the Dutch government, the Dutch side has not yet made a final decision. The matter has caused widespread concern in China, and the Chinese people are concerned that it will have a negative impact on Sino-Dutch and China-EU trade in the future. If the reports are true, if the United States pressures the Netherlands and the Dutch government therefore does not approve the export of EUV photolithography to China, then this is typical of politicizing business issues. Under applicable laws and international agreements, the United States has no reason to ask the Netherlands to restrict ASML exports to China. ASML’s cooperation with Chinese companies is purely a collaboration between technology and technology companies, and we welcome the continuous expansion of ASML in the Chinese market in recent years. In the era of globalization, industries are closely linked; cutting one of them will have a chain reaction, especially in the semiconductor industry. China is the world’s largest semiconductor market, accounting for more than 50% of global consumption of semiconductor products. If the United States interferes with normal business dealings between China and the Netherlands, it will have a negative impact on the development of the global semiconductor industry and ultimately harm the interests of its own companies and consumers. Dutch ASML technology is very advanced, in the world’s leading position, but any product s /a) can not be separated from the market support. Losing the Chinese market, not only the benefits are damaged, but also the lack of product technology to improve and develop an important platform, ASML itself will not want to do so.

We also note that the rules-based international trading system is being severely affected by the series of negative measures taken by the United States. 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 eliminate interference and make the right decisions independently on the basis of reason and the rule of law.

Reporter: You mentioned the importance of ASML in the semiconductor industry and thought that politicizing economic issues would have a negative impact on the global semiconductor industry. If the Dutch government listens to the United States and does not approve the Export License for EUV photolithographers, will ASML’s exports to other products in China be affected?

Xu Hongyu: ASML exports to China’s series of products involve a lot of details, this should be the Sino-Dutch related enterprises to discuss the issue. We hope that the Dutch government will make a correct judgment in the spirit of fair trade and the rule of law, taking into account its own interests and the interests of Dutch enterprises.

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

Xu Hongxuan: We are very clear about these positions. We have repeatedly expressed on various occasions the concern that Sino-Dutch trade should not be interfered with by political factors.

Reporter: But the U.S. has been warning the Netherlands that the EUV lithographdeal deal poses a “security risk.” What do you think of this?

Xu Hongxuan: Not only on the issue of EUV lithography machine, including the participation of Chinese enterprises in the construction of the Dutch 5G network, the United States has raised so-called “national security” concerns. This is an excuse that has no basis in fact. The rationale is that as long as products made in China are produced in China, there is a risk of “national security”. Without any evidence, they associate business issues with China’s institutions, ideology and the leadership of the Communist Party of China, saying that China’s socialist system, one-party dictatorship, and dealing with China are bound to be risky. They kept repeating such statements. But you see, there are so many troubles in the world, some places are fighting constantly, some places are displaced, some places are rampant terrorist activities, which of these troubles is caused by China? On the contrary, China has always been the promoter and builder of world peace.

The U.S. has accused China of cyber-theft through its own companies. But who is the biggest behind the 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 in the United States will control more than 3.34 million computer hosts in China. This is more than 90% higher than the previous year. In 2018, more than 3,000 IP addresses in the U.S. were planted on more than 3,600 sites in China, an increase of 43% over the previous year. China has borne the brunt of frequent attacks by U.S. groups on computers outside the country. You’ve all heard of the Prism project, and I don’t need to say much about Snowden’s revelations. China has always attached great importance to cyber security and firmly opposes cyber-attacks and cyber-theft. Now, the United States is fighting back, spreading rumors and constantly carrying out slanderous attacks against China.

Reporter: Are you saying China doesn’t engage in cyber-theft? What do you refer to as the United States in this series of actions has nothing to do with China?

Xu Hongxuan: The Chinese government’s position has been clear. China has never instructed any of its companies to install backdoors to steal foreign intelligence information. China has always opposed this practice. China has not done it in the past and will not do it in the future. The Prime Minister and other government officials have repeatedly stressed this on various occasions. As far as I know, the U.S. is asking its own companies to provide data stored overseas. In Google’s data center in the Netherlands, for example, it is obliged by U.S. law to provide data in its possession to the U.S. government. China has repeatedly objected to such an approach. It is not up to the United States to conclude, without any evidence, that China will do the same.

Reporter: Dutch lawmakers and technology companies are concerned that China’s intellectual property protection is not doing enough, intellectual property protection laws need to be improved. Can you talk about this?

Xu Hongxuan: I have asked many entrepreneurs operating in China whether they have any problems with intellectual property in China. The vast majority said they had no problems and praised China’s progress in protecting intellectual property rights. It is not ruled out that there will be cases of enterprises involving intellectual property rights being dealt with in the courts, but most of the evaluations we have heard are positive. China attaches great importance to the protection of intellectual property rights, and the level of intellectual property protection is gradually increasing.

Reporter: Why is China committed to improving intellectual property protection? It is thought that China’s never-out intellectual property protection system has benefited more.

Xu Hongyu: Only by improving the level of intellectual property protection can we better encourage innovation and competition. Access to intellectual property through improper means is unsustainable. In fact, China is now a big country of innovation, and we have the world’s intellectual property world. In 2018, China filed 1.542 million patent applications for inventions, ranking first in the world for 8 consecutive years. Among them, foreign applications in China for invention patents 148,000. 5G technology is made up of a series of patented technologies, of which Huawei accounts for more than 20% of the necessary patents, 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 also working to improve intellectual property laws, and last year we passed the Trademark Law and the Unfair Competition Law to strengthen the protection of trademarks and trade secrets. Next, we will amend the Copyright Law and the Patent Law to further improve the level of intellectual property protection. In the past, China’s compensation for intellectual property infringement was relatively low, and the revision of relevant laws and regulations will introduce a punitive compensation mechanism of up to five times the amount involved in the case, raising the maximum amount of compensation for trademark infringement and patent infringement to 5 million yuan. The newly adopted Foreign Investment Law explicitly prohibits the transfer of forced technology. In terms of judicial protection, the Supreme People’s Court has set up specialized intellectual property courts, and beijing, Shanghai, Guangzhou and other places have set up intellectual property courts. Overall, China’s intellectual property protection efforts are growing.

Reporter: You mentioned that the maximum amount of damages for infringement is 5 million yuan. By Western standards, the standard of Rmb5m is still low. I saw ASML claim stake of up to $800 million in an infringement case. What do you think of this?

Xu Hongyu: With regard to the actual loss of intellectual property infringement, the calculation method sits by national laws is different. You just talked about Western standards, in fact, the standards of Western countries are not the same, there is no uniform global standards. The Standards in the United States are different from that in the Netherlands. Therefore, in the international discussion of recognition and enforcement of intellectual property judgments of foreign courts, there is a great disagreement between the determination of punitive damages and cannot be agreed upon. All other countries, including Europe, have reservations about the high compensation they make to the United States. In addition, the protection of intellectual property rights can not be based on punitive compensation alone, there are many other areas of work to prevent the occurrence of intellectual property infringement.

记者:有人担心,虽然中国的法律法规有改进,但执法力度有待加强。您对此有何看法?

Xu Hongxuan: In order to ensure the implementation of the law, China’s law enforcement efforts continue to increase. What do you mean by worrying, is it just that there is this doubt, or is there really a company that won the judgment in China that is not enforced? If it’s the latter, you can tell us that we can get to know the situation. But if it’s just a worry, I don’t think it’s necessary.

Reporter: Another news story is that Dutch carmaker VDL lost out to Chinese company BYD in a local bid for a pure electric bus in the Netherlands. The president of VDL contributed to me that BYD was funded by the Chinese government and that there was unfair competition.

Xu Hongyu: I took note of the comments about the Dutch VDL. It was a natural reaction that the VDL bid had failed and was a bit unhappy. But to blame unfair competition, we have to speak up with the facts. The tender, the tender and the tender were conducted by the local Dutch authorities in accordance with the local laws of the Netherlands. VDL has contributed a lot to Dutch transportation, and although BYD received orders for 259 pure electric buses, it still has a 16% market share, with VDL still accounting for nearly 70%.

He referred to the issue of subsidies given by the Chinese government to domestic companies, which is an incorrect perception. It is common practice for all countries to grant certain subsidies to high-tech enterprises, and after China’s accession to the WTO, it has effectively fulfilled the requirements of the WTO Agreement on Subsidies and Countervailing Measures, not only eliminating the prohibition of subsidies, but also strictly complying with the WTO principle of transparency on subsidies and submitting thousands of circulars to the WTO. If there are still doubts, it can be resolved through the WTO dispute settlement mechanism. It is also important to note that The Chinese government’s subsidies to high-tech companies are not limited to state-owned or domestic enterprises, and that foreign companies investing in China can receive the same subsidies if they meet the conditions. In the case of new energy vehicle subsidies, which are only available in China, Tesla’s all-electric cars made in China also receive subsidies.

Reporter: The current wave of protectionism is rife, and the local dutch voice is on the rise. What would you think if the Dutch government had adopted its own priority policy of protecting local businesses, as the United States did?

Xu Hongxuan: I don’t think the Dutch government will do that. The Netherlands has always advocated free trade and fair competition. The Netherlands has a world-leading technology and product in many areas, and I have full confidence in the Netherlands. As long as it is fair competition, Dutch companies have a big advantage. Of course, this is not 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 the Dutch government permanently bans the export of EUV photolithography machines to China, what countermeasures will China take?

Xu Hongxuan: Of course, I hope that the Dutch Government will deal with the relevant matters on the basis of the principles of fairness, non-discrimination and the rule of law. We do not wish to see the Dutch Government refuse to export for political reasons or because of external pressure, and we expect the Dutch side to rule out interference and make a decision in the interest of mutually beneficial cooperation between China and the Netherlands.

Reporter: ASML export license is pending, and the Dutch government 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 of this?

Xu Hongyu: Huawei’s problems are also good, The problem of EUV lithography, the most important thing is to maintain the spirit of free trade, to create a fair, just and non-discriminatory business environment. The Dutch government should consider various factors when making decisions, and I hope the Dutch side can believe that China will never be the party that poses a threat to the national security of the Netherlands. The two leaders have long declared an “open and pragmatic comprehensive partnership”. As a partner, we hope to win-win cooperation with the Netherlands and develop and progress together.

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

Xu Hongsheng: words are better than words, the most important thing is action. The more exchanges and cooperation, the more trust will naturally increase. In the past few months I have met many Dutch people, and those who have been to China have basically taken a positive view of Sino-Dutch relations. Despite some difficulties for the time being, I remain confident about the future.

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

Xu Hongxuan: Many of the current U.S. administration’s practices are out of place. While the United States has provoked the Sino-Us trade war, it has also provoked trade disputes with Europe, the United States has withdrawn from many important international treaties, mechanisms and organizations, such as the Paris Agreement, and the WTO appeal mechanism has been suspended by the United States, which has hit the rules-centered multilateral trading system hard. Some senior U.S. officials have traveled the world to speak ill of Chinese, using offensive language without evidence to support it. It is difficult to deal with the United States now, and it requires more patience and wisdom from all countries. Regardless of the behavior of individual countries, China and the Netherlands and China share common interests in safeguarding multilateralism, free trade and multilateral trade mechanism with the WTO as its core. We should strengthen communication and coordination and unswervingly uphold multilateralism and fairness and justice.

Reporter: Back to ASML. Why is ASML’s export problem so important to China?

Xu Hongxuan: If the reports are true, this is a continuation of the continuing political repression of China by the United States in recent years. On Huawei’s participation in 5G construction in European countries, senior U.S. officials lobby and even intimidate every time they go to a country, with some reason to keep them from working with Huawei. The true intention of the United States in doing so is well known, apparently to block China on technology and contain China’s development. ASML exports to China is an example of Sino-Dutch cooperation in the field of science and technology, the Chinese people are very concerned about the Netherlands under pressure in the United States to decide what. It could be a weather vane.

Reporter: ASML is extremely important to the Netherlands, which has a lot of media coverage. For China, is this just another example of the U.S. technology blockade, or will it lead to an escalation of the Conflict between China and the U.S. or other serious consequences?

Xu Hongyu: We are looking at this issue from the perspective of the relationship between the two countries, not just a product of ASML. Whether TO ALLOW ASML TO EXPORT PHOTOLITITT TO CHINA IS NOT A SIMPLE TECHNICAL ISSUE, WHICH INVOLVES THE FUTURE POLICY ORIENTATION OF THE DUTCH GOVERNMENT, WHICH WE ARE VERY CONCERNED ABOUT. FOR THE NETHERLANDS, ASML IS EXTREMELY IMPORTANT. For its part, ASML also maintains a good relationship with China, which wants to expand into the Chinese market. If that desire is thwarted, it will also be a big blow to ASML.

Reporter: You mentioned that if the Dutch government does n’ go of export licensing, it will affect Sino-Dutch relations. Can you explain the specific impact?

Xu Hongyu: 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 Sino-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, you think the Dutch media, enterprises how to see ASML problem? Do they want ASML to stop doing business with China, or do they continue to do business with China on the basis of fairness?

Reporter: It’s hard to say, but many Dutch high-tech departments are concerned about the Dutch government’s interference in ASML, and worry that the Dutch government is giving in to the U.S., because the threat the U.S. preaches isn’t that serious after all.

Xu: The U.S. has repeatedly stressed security concerns about Chinese products or cooperation with China, but China has repeatedly stated that China does not threaten the security of the Netherlands, and we have always been a very good partner, and the exchanges between the two countries have been going on for more than 400 years.

Reporter: Will you be frustrated by the situation?

Xu Hongyu: We should have basic confidence and trust. China’s goal is to develop itself and enable people to live a better life. The achievement of this goal also requires working with other countries. So China will not challenge or threaten any country, and the United States can rest assured.

Reporter: Thank you, Thank you, Your Excellency.