In a significant shift in U.S. policy towards China on Friday, the Biden administration published a vast set of controls on technology exports to the Communist country.
The rules will go as far as restricting China’s access to specific semiconductor chips made with U.S. equipment, regardless of where in the world the chips are produced.
Jim Lewis of the D.C.-based think tank Center for Strategic and International Studies believes Biden’s move “will set the Chinese back years.”
The controls, however strict, are still just a unilateral move by the United States. The Biden administration has not received any pledges from allied nations committing to adopt similar measures, limiting the effectiveness of the president’s policy change.
The latest U.S. controls evolved out of the expansion of previous export restrictions against Chinese telecom company Huawei Technologies Co Ltd, implemented under former President Donald Trump’s administration. The same executive powers also prevented semiconductor technology from flowing to Russia following its invasion of Ukraine earlier this year.
Biden’s so-called “hardline” stance on China and Russia revives memories of the Cold War, according to Lewis.
For his part, a defense policy expert for the American Enterprise Institute, Eric Sayers, believes the administration’s move reveals its desire to contain a growing China, even if it requires trade restrictions.
“The scope of the rule and potential impacts are quite stunning but the devil will of course be in the details of implementation,” said Sayers.
Unsurprisingly, the Semiconductor Industry Association urged the United States in a statement to “implement the rules in a targeted way — and in collaboration with international partners — to help level the playing field.”
News of the rules reverberated through the semiconductor sector on Friday. Intel finished the day down roughly 5.4%, while NVIDIA was even deeper in the red, down over 8% on the day.
Possibly further aggravating tensions with the Communist country, as part of Friday’s announcements, the United States added dozens of Chinese entities, including the country’s leading chipmaker, YMTC, to a growing list of companies deemed “unverified.”
The United States requires foreign companies to allow on-site inspections by U.S. officials to verify that they can be trusted with sensitive U.S. technologies. When those inspections cannot happen, the company is added to the unverified list, triggering a 60-day clock that could end with the entity being placed on a U.S. trade blacklist.