U.S. expands export restrictions for dozens of companies

The U.S. Biden administration announced its sanctions against some 28 entities including the world's biggest genetics firm BGI and Chinese chipmaker Loongson.

The U.S. recently warned that it would expand export restrictions with its allies if China continues to support Russia's armed forces. This time, the entities included in the trade blacklist have allegedly contributed to modernizing the Chinese military or breached sanctions against Iran and Russia. The move demonstrates U.S.’s firm will to prevent any of its technologies from flowing into Chinese high-tech companies related to Chinese armed forces.

On Thursday, the Bureau of Industry and Security under the U.S. Department of Commerce released its list of 37 entities via the Federal Register system, adding that 28 of them are Chinese. Four Pakistani, three Myanmar firms, and one entity each in Russia, Taiwan, and Belarus have been added to the list.

China's BGI is cited for its alleged role in supporting China's military and human rights violations. The Department of Commerce said in its statement that the sanction on BGI was "based upon information that indicates their collection and analysis of genetic data poses a significant risk of contributing to monitoring and surveillance by the government of China, which has been utilized in the repression of ethnic minorities in China." Bloomberg analyzed that the entities such as Loongson and Inspur that are added to the list are "regarded as integral to the Chinese government's effort to replace foreign-made technology and propel domestic innovation." Beijing-based CPU maker Loongson is considered a potential alternative in the future for Intel Corp., while Inspur competes directly with servers made by the likes of HP Inc., the report noted. Another company cited is 4Paradigm Technology Co., an AI unicorn backed by some of the world's biggest investors, including Goldman Sachs Group.

The U.S. Departments of Commerce, Treasury, and Justice warned in their joint compliance note on using third-party intermediaries or transshipment points to evade Russian-related sanctions, saying, "Those who attempt to prop up Putin's war machine by evading our export controls and sanctions will be held accountable."

The Chinese government is offering its full support to YMTC, its largest chipmaker, and an entity on the U.S. sanctions list, by putting in nine trillion Korean won worth of investment and thus helping its technological independence. South China Morning Post reported that YMTC recently received 49 billion yuan (approximately 9.27 trillion Korean won) capital injection from three state-backed investors, according to data from the Chinese business registry platform Tianyancha. The Hongkong-based media noted that it is "a sign that Beijing is doubling down on its efforts to shore up domestic chip production amid growing tensions with the U.S."


Hyoun-Soo Kim kimhs@donga.com