U.S. exports of semiconductors and their components to China dropped 39% to $6.8 billion in 2023 and were down 52% from their 2021 peak, partly due to restrictions the Bureau of Industry and Security released in October 2022 and expanded a year later (see [Ref:2310170055), the U.S.-China Business Council said April 23.
Exports to China
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U.S. companies should expect more retaliation from China if the Bureau of Industry and Security adds more major Chinese technology firms to its Entity List this year, Paul Trulio, a China and technology policy expert, said during an event last week hosted by the Center for Strategic and International Studies. Trulio and other panelists also said it’s unclear exactly how a possible second Trump administration may tweak U.S. export control policy toward Beijing, but they said it’s possible former President Donald Trump, if reelected, could significantly increase restrictions on Chinese firms through potential financial sanctions and may pressure allies to do the same.
China said it “strongly” opposes the U.S. Commerce Department’s decision this week to add Chinese companies to the Entity List, calling on the U.S. to “stop politicizing trade and tech issues and turning them into weapons.” The listings targeted several Chinese firms for allegedly procuring export controlled items for China’s military modernization efforts or for Russia’s military (see 2404100018), but a Chinese Ministry of Foreign Affairs spokesperson told reporters at a regular press conference April 11 that China and Russia “have the right to normal economic and trade cooperation, and such cooperation should not come under external interference or constraint.”
The Bureau of Industry and Security added 11 parties to its Entity List this week for procuring items to support Iranian drone programs, China’s military modernization efforts or Russia’s military. The additions, outlined in a final rule released April 10 and effective April 11, include technology companies, logistics firms and one person based in either China, Russia or the United Arab Emirates.
American and Chinese officials discussed tariffs, export controls and market access issues during the April 2-5 first meetings of the U.S.-China Commercial Issues Working Group, both countries said in readouts after the talks.
The U.S. and the EU continued to discuss export controls, investment screening and other economic statecraft tools during the sixth meeting of the EU-U.S. Trade and Technology Council last week, saying they have made progress harmonizing export licensing decisions and plan to soon launch a new investment screening initiative. The two sides also renewed a mechanism to pinpoint and prevent global semiconductor supply chains issues and announced a new forum to coordinate on critical minerals trade.
The International Trade Commission is preparing for new Chinese export controls on germanium and gallium to have a potentially “significant” impact on global supply chains, it said in a recently issued executive trade briefing (see 2307050018).
President Joe Biden spoke April 2 with Chinese President Xi Jinping, raising concerns about Chinese “support” for Russia’s defense industrial base and the importance of U.S. technology export controls. “The President emphasized that the United States will continue to take necessary actions to prevent advanced U.S. technologies from being used to undermine our national security, without unduly limiting trade and investment,” the White House said in a readout of the two leaders’ phone call. The White House also said Secretary of State Antony Blinken and Treasury Secretary Janet Yellen plan to visit China.
U.S. government officials at the Bureau of Industry and Security’s annual conference last week underscored the value of Mandarin-language skills when conducting due diligence on potential Chinese customers.