Commerce’s Bureau of Industry and Security added five Chinese entities to its Entity List, the latest escalation in the U.S. and China’s ongoing trade war. The move restricts the entities' ability to purchase certain U.S. products and will require licenses for all items subject to the Export Administration Regulations with a review policy of presumption of denial. The entities are: Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, Higon, Sugon and Wuxi Jiangnan Institute of Computing Technology. The Wuxi Jiangnan Institute is owned by owned by the Chinese government, Commerce said.
Exports to China
A spokeswoman for China’s National Development and Reform Commission on June 17 gave the clearest indication yet that China may seek to impose restrictions on rare earths exports to retaliate for U.S. tariffs. In response to a question during a regularly scheduled press conference on potential export restrictions, the spokeswoman said China is “resolutely opposed” to “anyone who attempts to use China’s rare earth resources to manufacture products” that are used to “contain and suppress China’s development,” according to an unofficial translation. The spokeswoman also mentioned the possibility of export controls and traceability requirements for Chinese rare earths.
China appears to be formally laying the groundwork for export restrictions on rare earths, after previously only hinting in state media reports that they could be used to counter U.S. trade restrictions, according to an emailed update from the China-based consultancy Trivium. Citing a report from China's state-run Xinhua news service, Trivium said three Chinese ministries sent out survey teams June 10 to gather input from rare earths producers in several provinces. That follows three recent China National Development and Reform Commission symposiums where experts called for stricter export controls on rare earths, Trivium said. Though the survey was aimed at gathering “suggestions on how to improve protection and value of rare earths,” they also sought input on “further exerting the strategic value of rare earths and other resources,” according to an unofficial translation of the Xinhua report. The surveys signal that “Beijing is no longer hinting that it has the rare earths card at its disposal,” Trivium said. “Authorities have moved forward, and are seriously looking into the details of how exactly to implement export controls,” Trivium said. “Specifically, they are trying to understand how to minimize any negative impact on the domestic industry while maximizing external leverage.”
China is looking into additional measures to protect its technology firms and strengthen controls on exports through a “national technological security management list system,” according to state news agencies.
House members and experts made the case for a quick and long-term reauthorization for the Export-Import Bank of the United States during a June 4 House Financial Services Committee hearing, saying the move could significantly benefit U.S. exporters and help counter China’s export credit agencies and state subsidies. The hearing came about a month after the Senate voted to confirm three appointees to the bank’s board of directors, giving the bank enough directors for a quorum to approve transactions of more than $10 million (see 1905080073).
Panelists warned against increasingly strict export controls and criticized the Trump administration's handling of the Huawei blacklisting during a June 4 Senate Committee on Banking, Housing and Urban Affairs hearing on “Confronting Threats From China: Assessing Controls on Technology and Investment, and Measures to Combat Opioid Trafficking.” The U.S. is drawing dangerously close to shrinking markets for U.S. semiconductor exporters, the panelists said, a move that could prove devastating for the industry. They also suggested the Trump administration’s restrictions on Huawei are too broad and have hurt U.S. exporters as well as damaged trade talks between the two sides.
China is creating a list to penalize foreign entities that damage the interests of Chinese companies, a sweeping but vague move widely viewed as a direct response to U.S.’s recent blacklisting of Huawei Technologies.
The Commerce Department plans to roll back regulations that make it easier for U.S. exporters to sell goods that have both civilian and military purposes, making it more difficult for China to acquire U.S. technology, according to a May 23 report by Politico. As part of its plans, Commerce is considering ending a general policy of approving export licenses for products bound for civilian use, instead switching to reviews on a “case-by-case basis,” the report said. Commerce’s plans include “four regulatory actions” that target China under the Export Control Reform Act, including options that would revoke two license exceptions relating to shipping restricted technology to China and an option that would expand a ban on U.S. defense-related exports to China, the report said.
Export Compliance Daily is providing readers with some of the top stories for May 13-17 in case they were missed.
New U.S. sanctions on China in response to the country’s oppression of Uighurs could be effective, but there’s a risk of retaliation, experts said while speaking at a House Financial Services subcommittee hearing. Uighurs are an officially recognized ethnic minority group in China and other parts of Asia, descended from ancient tribes in Mongolia.