Will US high-tech regulations on China be successful? – Diplomat

U.S. Treasury Secretary Janet Yellen’s recent visit to Beijing was aimed at stabilizing the strategic relationship between the United States and China, but it also highlighted the intensification of high-tech competition, particularly in semiconductor manufacturing. A few days before her arrival, it was reported that the US government was seeking further restrictions on the transfer of semiconductor manufacturing know-how and technology to China, while the Chinese government announced new restrictions on the export of rare earths, which are essential for semiconductor manufacturing. Announced.

But the United States and China are not alone in this geotechnical dispute. Other major tech powers in Europe and Asia are also reevaluating their trade and investment relationships with China, often at the urging of the U.S. government. What is behind these developments, and how will they affect Sino-American relations and the United States’ relationship with its key allies in Europe and Asia? And what are the prospects for U.S.-led efforts to slow China’s access to sensitive technology?

Ongoing process and more to come

In recent years, the United States has aimed to blunt China’s access to military-related technology through measures such as passing the Export Control Reform Act of 2018, expanding the list of regulated companies, and increasing oversight of China’s military investments. We are accelerating our efforts to End of preferential trade between the United States and Hong Kong.

Under President Joe Biden, the United States continues this effort with a particular focus on the semiconductor sector. Initially, some expected Biden to review and reverse many aspects of the former Trump administration’s export control policies.Instead, the modernization goals of the People’s Liberation Army (PLA) shift Toward an “intelligent” war (IntelligentBattlequarrel) The Biden administration is ramping up efforts to limit and control China’s access to dual-use technologies that have potential military applications. This is especially true regarding semiconductor technology and equipment, which are critical to the future development of China’s AI sector and related military applications.

last year, CHIPS and scientific law Introduction by U.S. Department of Commerce Complete new export controls Export advanced computing and semiconductor manufacturing items to China. These measures are aimed at preventing the sale of high-end semiconductors and related design and manufacturing technology and systems to any company in China, including US companies based in China. Recently, report The Biden administration has signaled it will take action to further curb semiconductor-related transfers to China. To prevent US companies lease cloud services with AI capabilities to Chinese companies.

Additionally, as of this month, the U.S. Department of Commerce has classified approximately 600 Chinese organizations and individuals asentity list,” and 110+ added Since the inauguration of the Biden administration. Exports of certain technologies to these companies require licensing approval from the Department of Commerce in order to limit and prevent access to such U.S. technology. These Chinese entities include companies, research institutions, and individuals that support the People’s Liberation Army’s modernization efforts, participate in China’s military-civil fusion strategy, and are involved in military technology and advanced dual-use technologies.

The list also includes Chinese Defense Minister Li Shangfu, who was sanctioned in 2018, before his current appointment, for his involvement in arms imports from Russia.

Cooperation with allies

Another key element of the Biden administration’s approach is to limit China’s ability to replace lost access to U.S. semiconductor technology with access to related technology from U.S. allies. An important step in this direction has secured an appointment for January 2023. transaction among them Japan And that Netherlands The US also agreed to adopt the new one. Export restrictions on advanced semiconductor technology and equipment with China in mind.Beyond this agreement, recently report The Biden administration will soon Triggers rules barring foreign equipment suppliers from selling semiconductor manufacturing equipment to China that contains even a small amount of U.S.-made parts.

The Biden administration is also taking a multilateral approach, working with other Group of Seven (G7) countries. In April 2023, trade ministers from G7 countries: statement Just days after Japan announced new export controls on semiconductor technology, it will work with other countries to tighten export controls for technologies essential to military applications and other activities that threaten global, regional and national security. I promised. Furthermore, at the G7 Hiroshima Summit in May, A new tailored approach Regarding China, the focus was on “risk avoidance.”

Similarly, the European Commission published the following report: European economic security strategy, calls for “full implementation of EU export control regulations for dual-use items”. The European Union also Adjust the approach across blocks By making full use of existing dual-use laws and introducing EU-level export controls, we will achieve advanced chip export controls. According to European Commission Vice-President Valdis Dombrovskis, these steps are necessary “to ensure the coherence of common European policies on security, trade and technology.”

What to expect from here

Although the United States’ export controls to China will be further tightened, the United States will face many challenges. One of the same difficult balancing acts that Yellen had to decide during her recent visit to Beijing is that despite additional restrictions on high-tech trade, Washington It makes a convincing case that it is seeking a stable and constructive economic relationship with China. In the name of national security. This is a tension that Beijing will expose and denounce, particularly in its public diplomacy, as part of its efforts to warn other developed countries from following the same path.

As a result, another challenge will be keeping developed allies in Europe and Asia agreeing to expanded restrictions on high-tech know-how, technology, and manufacturing equipment. This means that U.S. regulations extend beyond the cutting-edge area of ​​chip manufacturing to other sensitive dual-use technologies, including naval and maritime technologies (such as propulsion and undersea detection), aviation technologies (such as jet engines), and military This is especially true when it comes to related technologies. and avionics), navigation and communication systems, and advanced industrial manufacturing applications.

U.S. pressure to restrict foreign companies’ exports of chips and chip-making equipment to China has been met with strong opposition from some quarters, including the South Korean government and South Korean tech giant Samsung Electronics.Under intense scrutiny from other allied governments and industry, the Biden administration announced Last month, it announced an extension of exemptions that allow major semiconductor manufacturers from South Korea and Taiwan to continue operating in China without U.S. sanctions.

Ultimately, export controls alone, and of course U.S. export controls alone, will not be sufficient to limit China’s military modernization over the long term. Institutions on the Commerce Department’s Entity List can purchase U.S. goods through unlisted subsidiaries or shell companies set up to circumvent regulations. Such a shell company can be set up within a few weeks. However, it can take years to identify and blacklist them.

It is also true that many of China’s less advanced but still effective and deadly military systems still rely on widely available, less sophisticated chips and other dual-use components. be.

Additionally, regulations from the United States and other allies likely limit China’s ability to manufacture advanced chips on a commercial scale, but also limit its technological ability to manufacture chips in limited numbers for specific military applications. The blocking effect is low.As a result of these and other factors, the Peterson Institute in 2022. report predicts that export restrictions will reduce China’s ability to produce advanced chips for military use until around 2027.

But despite these challenges, national security concerns will continue to dictate much of the U.S. government’s economic policy toward China. Efforts to restrict and control China’s access to advanced semiconductors and other dual-use technologies could likely impede future development of China’s AI and other high-tech fields and related military applications. would be the highest. The US government will increasingly expect its allies to take a similar approach.