US tightens export restrictions to keep tech out of Chinese military’s hands
- Crackdown is attempt to ensure that certain items, even those intended for civilian use, don’t help support the People’s Liberation Army
- New rules will require US companies to get licenses to sell specific products to businesses in China
The United States has tightened its export control regulations to prevent companies from sending products and technology to China that could strengthen its military.
The new rules, which were made public in a filing by the US Commerce Department on Tuesday, broaden the scope of products that must be reviewed by national security regulators before being shipped overseas.
Now included are any products that can be used to support or contribute to military operations and the installation, maintenance, repair, overhaul, refurbishment, development or production of military items. Sellers of products in the list will now be required to apply for licenses.
The restrictions also apply to US shipments to Russia and Venezuela.
The changes give the Commerce Department more power to stop exports in the semiconductor, aircraft and sensor industries, and other sectors that could bolster the countries’ military capacity. They would also restrict shipments to any Chinese company that has direct or indirect involvement with the People’s Liberation Army.
“Certain entities in China, Russia and Venezuela have sought to circumvent America’s export controls, and undermine American interests in general, and so we will remain vigilant to ensure US technology does not get into the wrong hands,” Commerce Secretary Wilbur Ross said on Monday.
Sanjay Mullick, a lawyer specialising in international trade and national security at Kirkland & Ellis in Washington, said the new rules eliminated exceptions that allowed exports of sensitive US technology from certain US-aligned territories, including Hong Kong. The move reflects Washington’s “growing concern in particular with regard to China’s influence over Hong Kong”, he said.
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The tightening of export restriction are part of a shift in national security and foreign policy objectives undertaken by the Trump administration.
In the National Security Strategy report issued by the White House in 2017, the administration said that countries such as China and Russia challenged “American power, influence and interests, attempting to erode American security and prosperity.”
“They are determined to make economies less free and less fair, to grow their militaries, and to control information and data to repress their societies and expand their influence,” the report said.
The passage of the US Congress’ 2019 defence spending bill provided the legal basis for the regulatory changes regarding export controls as well as expanded authority for the inter-agency committee that oversees foreign investments.
The new rules apply to chemical products, toxins such as hydraulic fluids, electronic devices, computers, telecommunications and marine or terrestrial acoustic equipment capable of detecting or locating underwater objects.
Also included is equipment related to nuclear material handling and processing as well as airborne communication equipment, aircraft navigation systems, vessels, marine systems or equipment, space vehicles and gas turbine engines.
The Trump administration has been increasingly worried about China’s strengthening of the PLA by the acquisition of advanced foreign technology. In 2015, China proposed a military-civilian fusion initiative as part of its five-year plan.
The policy “aims to spur innovation and economic growth through an array of policies and other government-supported mechanisms, including venture capital (VC) funds, while leveraging the fruits of civilian innovation for China’s defense sector”, according to a congressional report published by the US-China Economic and Security Review Commission.
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“The breadth and opacity of military-civil fusion increase the chances civilian academic collaboration and business partnerships between the United States and China could aid China’s military development,” the report said.
Industries affected by the new rules expressed concern.
The president of the Semiconductor Industry Association, John Neuffer, said on Monday: “While we understand military-civil fusion trends demand smart and targeted national security responses, we are concerned these broad rules will unnecessarily expand export controls for semiconductors and create further uncertainty for our industry during this time of unprecedented global economic turmoil.”
