US targets Chinese tech and defense sectors over security concerns

Washington will continue to target China’s high-tech and defense sectors and take steps that could lead to technology decoupling, observers say after the United States added more Chinese companies to its blacklist of ‘export.

A dozen Chinese companies – including quantum computing and semiconductor companies and companies that have contributed “to Pakistan’s unprotected nuclear activities” – have been placed on the trade blacklist, known as of entity list on Wednesday, with the US government citing national security concerns.

Some of these companies have been blacklisted for their “support for the military modernization of the People’s Liberation Army” and for “the acquisition and attempted acquisition of items of American origin in support of ‘military applications,’ the US Department of Commerce said.

The latest move comes as tensions simmer over issues such as trade with Taiwan and human rights and after the United States has expressed concern over China’s rapid military developments, including the recent test nuclear-capable hypersonic missile.

“Global trade should support peace, prosperity and well-paying jobs, not national security risks,” US Secretary of Commerce Gina Raimondo said in a statement.

Eight China-based tech entities were added to the list, which the Commerce Department said aimed to prevent the use of emerging U.S. technologies for China’s quantum computing efforts that support military applications, such as counter-stealth and counter-submarine applications, and the ability to break encryption or develop unbreakable encryption.

US suppliers of companies on the entity list will need to apply for a license before they can sell to them, which will likely be refused.

Responding to the latest ruling on Thursday, Chinese Commerce Ministry spokeswoman Shu Jueteng said the new blacklist was not in line with the consensus reached at last week’s summit between the U.S. and Chinese leaders. She said it does not support the global industrial supply chain or the global economic recovery.

“The US side has generalized the concept of national security and arbitrarily introduced sanction measures that seriously lack a basis in fact, and the process has been very opaque,” ​​Shu said. China was firmly opposed to the move and would make “solemn representations” to the United States, she added.

Foreign Ministry spokesman Zhao Lijian said China will take countermeasures to protect the legitimate interests of its companies.

Washington’s latest gesture indicates that there is no relaxation in the “strategic competition” between the two powers, especially in the high-tech and defense sectors, according to observers.
It follows last Tuesday’s virtual summit between Chinese President Xi Jinping and his US counterpart Joe Biden aimed at managing tensions, in which Xi said the United States should “stop abusing and generalizing the concept of national security to suppress Chinese companies ”.

Wu Xinbo, director of the Center for American Studies at Fudan University in Shanghai, said there had been signs of improvement in relations, but there would be no change in US competition policy. strategic with China.

He said science and technology were at the heart of measures to block and even disassociate themselves from China, especially in semiconductors, artificial intelligence, quantum technology and biopharmaceuticals.

“This is aimed at suppressing China, especially its military, and indicates that the United States will continue to do so to maintain its economic and military superiority over China,” Wu said.

It comes after 14 Chinese companies and other entities were blacklisted in July for alleged human rights violations and high-tech surveillance in the western Xinjiang region. In June, 59 Chinese companies believed to be linked to the military and surveillance efforts were banned from US investment.

Wu said the latest crackdown was more targeted. “Now it is reducing the scope and moving towards technological decoupling, with a greater focus on the high-tech and defense sectors,” he said.

This view was echoed by a Chinese government adviser on trade with the United States, who said Washington was stepping up efforts to block these sectors despite Xi and Biden agreeing on the need. to avoid conflicts during last week’s talks.

“The repression is intensifying and I fear that the two countries will eventually embark on the path of decoupling,” said the adviser, who requested anonymity.

Additional reporting by Orange Wang and Catherine Wong


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