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US blocking Chinese acquisitions of global tech firms a 'red flag': Chinese tabloid

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Chinese and US flags are set up for a meeting at China's Ministry of Transport in Beijing, China April 27, 2018. (Reuters photo)

The United States' efforts to block China’s cross-border acquisitions of tech firms is a "red flag" that impedes the Asian’s tech sector and disrupts the growth of the worldwide tech sector, Chinese tabloid the Global Times says.

The outlet published by the People's Daily, China's official newspaper for the ruling Communist Party (CCP), has argued that Washington’s recent attempt to block Beijing’s purchase of a Korean chip firm "represents a dangerous precedent for the industry as a whole."

"If the US succeeds in blocking the deal this time, it could set a very bad precedent for global high-tech mergers and acquisitions, further consolidating the industrial concentration in the US," the op-ed read.

This comes after China-based private equity group Wise Road Capital said in March it would buy Korea's Magnachip Semiconductor Corp. for $1.4 billion.

However, Magnachip said Monday in an SEC filing that the US Department of Treasury wrote a letter to the company's legal counsel last Friday, warning that the acquisition presented "risks to the national security of the United States."

The chip sector has become a hotbed for tensions between the US and China which are already at odds over a range of issues.

The world’s two top economies are both investing billions in their domestic industries, with the recognition that semiconductors are crucial to national security and economic development.

Government objections to cross-border acquisitions, which require approval from regulatory bodies, have at times caused them to fall apart.

In 2018, Qualcomm Inc.'s planned $44 billion acquisition of Dutch chipmaker NXP Semiconductors NV fell through after China's anti-monopoly regulator signaled it would disapprove of the deal.

That same year, Singapore's Broadcom Inc. did not go ahead with its $117 billion bid to acquire Qualcomm after Washington's Committee on Foreign Investment in the United States (CFIUS) said the move could put at risk the US' national security by helping China.

The US and China are at loggerheads over issues, including alleged human rights abuses in Xinjiang, and Beijing's policies in regard to Hong Kong, the Chinese Taipei, and the disputed territories in the South China Sea, as well as the origins of the COVID-19 pandemic.

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