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US draws Beijing’s ire with new rules to choke off China’s access to chips

Danson Cheong/ The Straits Times/ ANN

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The Biden administration announced new export curbs to cut off China’s access to high-tech US semiconductors, in its latest move to stymie Beijing’s efforts to develop the country’s chip industry and military technology.

The restrictions, which will worsen already strained relations between the two superpowers, drew an angry rebuke from Beijing, with Chinese Foreign Ministry spokesman Mao Ning calling the move an abuse of trade measures designed to maintain American “technological hegemony”.

“The US side is politicising and weaponising technology and trade issues, but it will not be able to stop China’s development. Its actions will backfire, hurt and isolate the US,” she said on Saturday.

The US Commerce Department’s Bureau of Industry and Security (BIS) said the new rules are aimed at restricting China’s ability to “obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors”.

“These items and capabilities are used by the PRC to produce advanced military systems including weapons of mass destruction; improve the speed and accuracy of its military decision-making, planning and logistics, as well as of its autonomous military systems; and commit human rights abuses,” said the BIS on Friday, referring to the People’s Republic of China.

The rules will restrict the export to China of some types of chips used in artificial intelligence and supercomputing, including chips made outside the US with American tools or technology.

They will also restrict the sale of US semiconductor manufacturing equipment to any Chinese firm.

Some of the rules will go into effect immediately, with the rest coming online later in October.

Professor Zhu Feng, dean of the Institute of International Relations at Nanjing University, said the sanctions are an “obvious escalation” of the technological war between the two superpowers.

“The goal is to suppress the development of China’s high-tech and advanced manufacturing industries, which will allow the US to continue to expand its competitive advantages,” he said.

While Washington had previously also imposed sanctions that limited the export of chips to Chinese telecoms firm Huawei, including those made outside the US, the latest sanctions are far broader in scope, affecting dozens of Chinese companies.

Professor Sarah Kreps, who heads Cornell University’s Tech Policy Lab,
said: “Sophisticated semiconductor chips are essentially the brain behind advanced defence systems and the view is that if the US restricts components of these chips, it can stunt China’s rise as a peer competitor.”

But the sanctions will not apply to foreign chipmakers, and one big challenge for the US is to convince its allies that also manufacture these components to restrict such exports to China.

Failing to do so means “US firms will lose market share and China will find a bypass to the US restrictions, a worst-case scenario”, said Prof Kreps.

“The administration will have to spend time shoring up support from these allies by making the case that these restrictions are necessary and likely to be effective.”

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