The law will “intensify geopolitical competition in the semiconductor industry and hinder the global economic recovery and the growth of technological innovation”, said the groups, the China Council for the Promotion of International Trade and the China Chamber of International Commerce.

The legislation’s goal of encouraging the construction of new plants in the US “discriminates against some foreign companies, uses state power to forcibly change the international division of labour in the semiconductor industry and harms the interests of companies around the world, including in China and the US,” the associations said.

The groups urged the international business community to come together to “eliminate the adverse impact” of the legislation.

Chinese foreign ministry spokesperson Wang Wenbin criticised the US legislation Wednesday as an example of American “economic coercion”.

“No restriction or suppression will hold back China’s science and technological development and industrial progress,” Wang said.

The CHIPS Act, signed into law by President Joe Biden on Tuesday, earmarks US$52.7 billion in subsidies for US semiconductor production and development.

It bans companies that receive these funds from investing in the production of advanced chips in China. Beijing has invested heavily in its own semiconductor industry through a state-backed fund.