China’s spy agency warns of more US tech curbs; promises to gain ‘the upper hand’

Ministry of State Security says a new round of US ‘sanctions and suppression policies’ could be brewing after Huawei’s smartphone success
Rare public comments come after 42 more Chinese firms were added to the US export control list

Science

Zhang Tongin Beijing

Published: 8:59pm, 7 Oct 2023

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China’s top spy agency has warned that the “tech war” waged by the US could get worse.

“It is foreseeable that the United States will continue to pursue anti-globalisation and decoupling-China policies to maintain its hegemony,” the Ministry of State Security said in a rare public statement on its official WeChat account on Saturday.

The ministry predicted that the US would roll out another round of sanctions to contain China’s hi-tech development, in part because of tech giant Huawei.

“Recently, Huawei has launched a series of consumer products such as the Mate 60 Pro, making an important breakthrough for China in the semiconductor domain” and this upset the US,” the ministry said in its post.

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A teardown by Canadian company TechInsights confirmed that nearly all components inside the Mate 60 phone were produced in China, including an advanced microchip.

Huawei’s new device not only offers 5G connectivity – a target of the US sanctions – but can also make calls via a satellite 36,000km (22,370 miles) away, a technology currently beyond the reach of international competitors including Apple.

The Mate 60’s release coincided with the visit of Gina Raimondo, the US commerce secretary, last month.

“After returning to the United States from her visit to China, Raimondo declared that ‘the United States will not sell its top chips to China’ and said that she was ‘displeased’ by Huawei’s launch of new mobile phones equipped with advanced chips during her visit,” the ministry said.

“The United States is brewing a new round of sanctions and suppression policies.”

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The US government expanded its Export Administration Regulations on October 7 last year, adding 31 Chinese entities to the “unverified list” and intensifying previous export controls on semiconductors to China.

The “tech war has strayed from its intended course, with victory becoming increasingly elusive for the US”, the ministry statement said on the first anniversary of the upgraded US sanctions.

An increasing number of people have indicated that chip sanctions against China would not bring about the desired results, as the chips inside Huawei’s smartphone bring into question the efficacy of the US’ global blockade.

Several industry leaders, including Nvidia and Dutch firm ASML, have urged the US to reconsider its position.

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ASML CEO Peter Wennink had said that if China could not access chip manufacturing machines, it would eventually develop its own, a sentiment echoed by Nvidia CEO Jensen Huang who warned of the considerable harm the US “chip war” could inflict on its own tech sector.

Tech giants like Qualcomm, Intel and AMD have reported significant revenue declines this year, with Intel registering a net loss of US$2.8 billion in the first quarter.

China’s imports of chips fell by about 20 per cent in the first quarter of 2023.

There had been some optimism recently that the US would relax sanctions on China, but the ministry suggested that industry leaders would be ignored and China would need to brace for more pain.

“The US restrictive measures, at best, are a stalling tactic. As China aims for tech development and security, we aspire to gain the initiative and the upper hand,” the statement said.

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Last month, the US Department of Commerce announced new additions to the “entity list” of export controls. China’s Ministry of Commerce opposed the actions, accusing the US of imposing sanctions under the pretence of military, Iran and Russia-related concerns.

On Friday, another 42 Chinese firms had been added to the export control list, with the US accusing them of “supporting Russia’s defence industrial base”, according to a Reuters report.