BEIJING, Aug 15 (Reuters) - The United States' practice

of installing location trackers in chip shipments at risk of

diversion to China reflects the "instincts of a surveillance

empire," China's state-run media outlet Xinhua said in a

commentary published on Friday.

Reuters reported earlier this week that U.S. authorities had

secretly placed location tracking devices in targeted shipments

of advanced chips to detect diversions to China, which is under

U.S. curbs for advanced chip exports.

The Xinhua commentary, titled "America turns chip trade into

a surveillance game," cited "reports" that Washington had

embedded such trackers, accusing the United States of running

"the world's most sprawling intelligence apparatus".

The U.S. government has in the past few years tightened

restrictions on the exports of advanced chips as well as related

technology and equipments to China, as the two superpowers vie

for technological dominance.

The Chinese commentary follows longstanding accusations from

Washington and its Western allies that China could use some

exported products, from telecommunications equipment to

vehicles, for surveillance, posing potential security risks.

In 2022, the Biden administration banned the sale and import

of new telecommunications equipment from several Chinese firms,

including Huawei, citing national security concerns. In January,

it intensified scrutiny by targeting China-made cars and trucks.

In its commentary, Xinhua accused the U.S. government of

seeing its trading partners as "rivals to be tripped up or taken

down," adding that "if U.S. chips are seen as Trojan horses for

surveillance, customers will look elsewhere."

China's cyberspace watchdog last month said it had asked

U.S. chipmaker Nvidia ( NVDA ) to explain whether its H20 chips had any

backdoor security risks - a hidden method of bypassing normal

authentication or security controls.

Chinese authorities have also cautioned domestic tech firms

over their use of H20 chips, Reuters recently reported.