US Entity List Additions Point To Lack Of United Front

Screenshot of US Commerce Dept press release on Entity List addtions, accessed Nov 26, 2021

MORE THAN A dozen Chinese firms have been added to the US Entity List, continuing the Biden administration’s two-track policy of maintaining a hard line towards Beijing while simultaneously trying to keep the relationship from deteriorating further. 

Eight of the newly listed companies are accused of aiding the People’s Liberation Army with its development of quantum computing. US companies are banned from doing business with any entity on the list, effectively cutting off US sources of components and supplies.

A further 16 Chinese entities are said to be aiding Pakistan’s nuclear weapons programme.

Three affiliates of Corad Technology Ltd, a Chinese group added to the Entity List in 2019, were also added because of their involvement in sales to Iran’s military and space programs, North Korean front companies and Chinese government and defence industry subordinate entities.

We are likely to see more such targetted measures to deny China access to cutting-edge technologies as the United States is having some difficulty building an international ‘united front’ against China in strategic technologies.  

For example, the US Commerce Department’s heavy-handed attempts to get information from firms involved in the global semiconductor supply chain about their business operations — backed by threats of compulsion in the event of non-compliance — drew pushback from key foreign companies such as TSMC and Samsung, supported by their governments. 

In Washington, where a ‘Make in America’ industrial policy and hostility towards China’s perceived threat to US security has become a potent political combination, the response to the Commerce Department’s request was seen as a test of allies’ attitudes towards supporting US priorities concerning China. 

However, the response by TSMC, Samsung and others, who saw the US request as highly intrusive towards their commercially confidential information, was lukewarm. At the same time, their governments’ support for their reticence was strong.

This reduces the Biden administration to a narrower objective of coordinating export controls with allies and pursuing palatable alternatives such as pushing for global technical standards.

Meanwhile, that will not deter the leading non-US chipmakers from expanding their trade and investment in China in less politically sensitive areas.

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Filed under China-U.S., Technology, Trade

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