House Foreign Affairs Committee Chairman Michael McCaul, R-Texas, on Dec. 3 criticized the Biden administration’s new export controls on advanced computing chips and chipmaking equipment, saying they leave too many loopholes that Chinese companies can exploit to obtain American technology and modernize China’s military. McCaul said he plans to work with the incoming Trump administration to close those loopholes. McCaul made his comments a day after the Bureau of Industry and Security unveiled the new restrictions (see 2412020016).
Exports to China
One day after the U.S. published a new set of semiconductor-related export controls aimed at China (see 2412020016), Beijing announced a ban on certain key critical minerals and other dual-use items being shipped to the U.S. for military uses.
Export Compliance Daily is providing readers with the top stories from last week in case you missed them. You can find any article by searching for the title or by clicking on the hyperlinked reference number.
The latest U.S. semiconductor-related export restrictions represent a strengthening of controls on China along with a “massive” expansion of foreign direct product rule restrictions, but they also include some head-scratching loopholes that chip firms will exploit, semiconductor policy researchers said this week.
A new set of U.S. export controls announced this week target a range of semiconductor manufacturing equipment, chip software tools, high-bandwidth memory and more, including by introducing new license obligations on certain foreign-made tools that the Bureau of Industry and Security said can be used by China to make advanced chips for its military. BIS also added more than 100 entities to the Entity List, most based in China, for aiding Beijing's military technology goals.
No policy option available to the U.S. government, including lifting export controls, will persuade China to stop trying to de-Americanize and decouple its semiconductor equipment sector, the Center for Strategic and International Studies argued in a new report this week.
The Bureau of Industry and Security added more than 100 entities to the Entity List and released a new set of semiconductor-related export controls on Dec. 2, introducing new license requirements for both U.S.-origin and foreign-produced chip tools and publishing new red flag guidance on how companies should be vetting Chinese chip factories.
China’s Foreign Ministry objected to a new set of export controls the U.S. is reportedly planning to announce in the coming days, saying it’s opposed to the “U.S. overstretching the concept of national security, abusing export control measures and making malicious attempts to block and suppress China.” A ministry spokesperson told reporters Nov. 25 that the new controls would disrupt international trade and global supply chains. “China will take resolute measures to firmly defend the legitimate and lawful rights and interests of Chinese companies,” the spokesperson said.
The U.S. government likely needs to change the way it's trying to convince Japan, the Netherlands and other allies to impose export controls on a broader set of semiconductor manufacturing equipment, including by potentially offering them economic incentives and loosening some existing export restrictions, researchers said in a new report this month. The authors also said the Bureau of Industry and Security should survey American chip toolmakers to better understand global chip markets, which can help it maximize the effectiveness of its current export restrictions.
China has been “consistently” building a set of policy tools it can use to retaliate against the U.S. and other countries in response to trade controls or other restrictions, and companies could soon start seeing China deploy those tools more frequently, said David Hathaway, a consultant on China issues for The Asia Group.