China criticized the U.S. move to add Chinese companies to its Entity List last week (see 2012180039), saying it unfairly suppresses Chinese industry and is an abuse of export controls. A Chinese Foreign Ministry spokesperson urged the U.S. to reverse the measures. “China firmly opposes this and will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” the spokesperson said Dec. 19, according to an unofficial translation of a release of a press conference transcript.
Exports to China
The Bureau of Industry and Security added 77 entities and people to the Entity List, including China’s top chipmaker, to further prevent China and other countries from acquiring sensitive U.S. technologies, the agency said Dec. 18. Along with China’s Semiconductor Manufacturing International Corporation, the Entity List additions include China-based DJI, one of the world’s largest drone makers, and companies in Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia and the United Arab Emirates.
As the U.S. increasingly relies on sanctions, export controls and trade restrictions as foreign policy tools, it should expect China to follow its example, former U.S. government officials said. While other countries are beginning to mimic U.S. trade strategies, the policies are most notably taking hold in China, the officials said, which recently rolled out an export control regime (see 2010190033), has increased threats of sanctions for foreign interference in Hong Kong and Taiwan (see 2012100022 and 2010260017) and issued regulations for its unreliable entity list (see 2009210017).
China is a threat to the U.S., Sen. Tom Cotton, R-Ark., said, and he said there's a risk that “the next administration could roll back much of the progress we’ve made the past few years, in an attempt to return to the failed dream of engaging and accommodating China.” Cotton, the chairman of the Senate Banking Committee Subcommittee on Economic Policy, led a subcommittee hearing Dec. 16 on U.S.-China Economic Competition. Cotton said during the hearing that export controls must be tightened.
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The Commerce Department will not publish its long-awaited proposed regulations on routed export transactions (see 2007150044) this year and is experiencing delays on other rules, including another set of export controls from the 2019 Wassenaar Arrangement, a Commerce official said. Hillary Hess, the Bureau of Industry and Security’s regulatory policy director, cited a combination of internal BIS delays and a backlog at the Federal Register for the slowdown.
The U.S. sanctioned 14 officials on China’s National People’s Congress Standing Committee associated with Hong Kong’s so-called national security law, the latest escalation in a series of U.S. designations aimed at Beijing. The sanctions target various NPCSC vice chairpersons who were involved in “developing, adopting, or implementing” the law, which has allowed Beijing to “stifle dissent” and arrest pro-democracy advocates, the State Department said Dec. 7.
China's attempts at using economic tools, such as export controls on rare earth minerals or punishing imports from Australia, have only been somewhat successful, according to Maximilian Ernst, the speaker on the American Institute for Contemporary German Studies webinar Dec. 7, called “How to Respond to China’s Carrots and Sticks? Prospects of a Transatlantic Response to Chinese Economic Coercion.” Ernst is researching Chinese coercion for a Ph.D.
China reportedly has developed a supercomputer that gives it an advantage in quantum computing, an emerging technology category that the U.S. has sought to prevent China from dominating. The computer can perform certain computations 100 trillion times faster than the world’s fastest existing supercomputer, giving China a “quantum computational advantage,” or “quantum supremacy,” Xinhua, China's state-run news agency, reported Dec. 4. Chinese researchers also said the computer can perform certain processes 10 billion times faster than the quantum computer developed by Google. The Bureau of Industry and Security is considering export controls on certain technology related to quantum computers, with those restrictions in their final rule stage as of July (see 2007140027). A BIS spokesperson said the agency continues to “evaluate and identify technologies that warrant control.”
The Justice Department plans to announce more indictments involving cases of Chinese technology theft before the Joe Biden administration takes over in January, top U.S. security officials said. Under the agency’s China initiative (see 2008130036), the U.S. has targeted and arrested Chinese nationals for trying to steal export-controlled technology, an effort that has resulted in more than 1,000 Chinese researchers leaving the country since July, said John Demers, the U.S. assistant attorney general for national security.