US government expands restrictions on exports of advance tech to China

The US government has expanded restrictions on exporting advanced tech to China by adding 36 entities to the Entity List, primarily due to national security concerns. Entities involved in areas like artificial intelligence, military support, and illegal export activities were included. In contrast, 25 Chinese entities were removed from the Unverified List, with the Chinese government opposing the new restrictions while welcoming the removal of these entities from the list. Additionally, nine Russian entities were added to the Entity List due to incomplete verification checks.

The US Department of Commerce’s Bureau of Industry and Security (BIS) announced new restrictions on the export of advanced US technologies to Chinese entities. The Bureau added 36 new entities to the Entity List, meaning that they will be subject to strict licence requirements significantly restricting their access to commodities, software, and technologies subject to the US Export Administration regulations. Among these 36 entities, 35 are primarily located in China and 1 in Japan (but it is a subsidiary to a Chinese entity). The US government argues that these entities were found ‘to be acting contrary to the national security or foreign policy interests of the United States)’ for the following reasons:

  • Twenty-one entities are major artificial intelligence (AI) chip research and development (R&D), manufacturing, and sales entities thought to be or have close ties to government organisations that support the Chinese military and defence industry.
  • Two entities were added to the list for acquiring or attempting to acquire US-origin items in support of China’s military modernisation.
  • Seven of the entities engaged in supporting China’s military modernisation were found to have demonstrable direct ties to activities of concern.
  • Four entities are seen as posing a significant risk of becoming involved in activities that could have a negative impact on the national security or foreign policy of the USA.
  • One entity was found to engage in or enable activities contrary to US foreign policy interests.
  • One entity was found to facilitate the illegal export of US-origin electronics to Iran for use in the production of military unmanned aerial vehicles and missile systems.
  • For two entities, additional restrictions were imposed for having supported, or continued to support, Russia’s military (‘backfilling’) since the imposition of new export controls.

In a second rule issued on the same day, BIS:

  • Removes 25 Chinese entities from the Unverified List (UVL) due to satisfactory completion of End-Use Checks (EUCs) and verification of those entities’ bona fides, including in cooperation with the Chinese government. This means they are now removed from BIS’ restricted party lists.
  • Adds 9 Russian entities to the Entity List from the UVL due to the inability to complete EUCs.

Commenting on the two rules, the Chinese government expressed opposition to the addition of the 36 entities to the export controls list, noting that it ‘will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies and institutions’. At the same time, it welcomed the removal of the 25 entities from the unverified list.