Secretary of State Mike Pompeo said, “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground,” in a statement May 27 to Congress that Hong Kong no longer warrants the same treatment under U.S. laws as it did before the handover to China in 1997.
Exports to China
China criticized the U.S.’s decision to add more Chinese companies to its Entity List (see 2005220058), adding that it will take measures to “protect the legitimate rights and interests of the Chinese enterprises.” A Chinese Foreign Ministry spokesperson said the U.S. has “overstretched the concept of national security” and abused its export controls. “We urge the U.S. to correct its mistake, rescind the relevant decision, and stop interfering in China's internal affairs,” the spokesperson said during a May 25 press conference.
Two senators plan to introduce a bill they say will expand U.S. sanctions against Chinese efforts to meddle in Hong Kong’s autonomy. The bill would impose sanctions on Chinese policymakers and entities and would introduce secondary sanctions against certain banks, said Sens. Pat Toomey, R-Pa., and Chris Van Hollen, D-Md.
A new law being considered by China’s National People's Congress could trigger U.S. export controls and cause the U.S. to revoke Hong Kong’s special customs status, said Jude Blanchette, a China expert at the Center for Strategic and International Studies. The new national security law, which is expected to be proposed during China’s current NPC session, would criminalize “treason, sedition and secession,” Blanchette said, and will likely cause the U.S. to enact measures under the Hong Kong Human Rights and Democracy Act, which passed in November 2019 (see 1911290012).
China said it will take countermeasures to respond to increased U.S. export restrictions against Huawei, calling the changes an “abuse of export controls” and a violation of international trade laws. The restrictions, which place a license requirement on shipments to Huawei for foreign-made chips containing U.S. content, are a “serious threat” to China’s chip industry and supply chains, China’s Commerce Ministry said May 17, according to an unofficial translation. The ministry did not specify what the countermeasures will entail, but state media said China is considering placing U.S. companies on its so-called unreliable entity list and stopping purchases of aircraft from Boeing (see 2005150058).
The Commerce Department amended its direct product rule, increasing restrictions on foreign-made chips exported to, and made by, Huawei and its affiliates, the agency said in a May 15 interim final rule. Commerce also said it does not expect to issue another temporary general license extension for the Chinese technology company after its latest 90-day renewal expires Aug. 13.
Republican lawmakers urged the Commerce Department to be more transparent when imposing export restrictions on critical U.S. industries, saying they are concerned that Commerce did not consult with industry before imposing significant export regulations last week. In a May 6 letter, six senators asked President Donald Trump to more closely follow congressional intent as described in the 2018 Export Control Reform Act, which lists a preference for a public comment period and multilateral export controls over unilateral decisions.
The U.S. should be mindful of not harming the U.S. technology industry as it seeks to impose export restrictions on semiconductor shipments to China, said James Andrew Lewis, director of the technology policy program at the Center for Strategic and International Studies. Those restrictions could cut the U.S. off from consumers, leading foreign companies to design U.S. components out of their products and build alternate supply sources, Lewis said in a May 5 CSIS post.
China’s Commerce Ministry criticized the U.S. Commerce Department’s decision to increase restrictions on exports to Chinese military users, saying it will “damage the interests of related U.S. companies more.” The measures, introduced last week (see 2004280052), were examples of the U.S. “abusing export control measures and impeding normal trade and cooperation among trading partners,” a ministry spokesperson said during an April 30 press conference, according to an unofficial translation of a transcript of the event. China said governments have a “responsibility” to reduce trade barriers during the COVID-19 pandemic “rather than create obstacles,” adding that “it is hoped that the U.S. side will stop wrong practices.”
The Commerce Department Bureau of Industry and Security is working on guidance to help industry comply with the expanded licensing requirements for exports to China announced earlier this week (see 2004270027). The guidance will address new restrictions on exports intended for military users and uses, said Matt Borman, Commerce deputy assistant secretary for export administration. The rule expands the definition for military end-use and will cover military end-users in China, placing more of a compliance burden on industry.