China says it is “deeply concerned” over reports that the United States is moving to further restrict sales of American technology to Huawei, a tech company that U.S. officials have long singled out as a threat to national security for its alleged support of Beijing’s espionage efforts.
As first reported by the Financial Times, the U.S. Department of Commerce has informed American firms that it will no longer issue licenses for technology exports to Huawei, thereby isolating the Shenzen-based company from supplies it needs to make its products.
The White House and Commerce Department have not responded to VOA’s request for confirmation of the reports. But observers say the move may be the latest tactic in the Biden administration’s geoeconomics strategy as it comes under increasing Republican pressure to outcompete China.
The crackdown on Chinese companies began under the Trump administration, which in 2019 added Huawei to an export blacklist but made exceptions for some American firms, including Qualcomm and Intel, to provide non-5G technology licenses.
Since taking office in 2021, President Joe Biden has taken an even more aggressive stance than his predecessor, Donald Trump. Now the Biden administration appears to be heading toward a total ban on all tech exports to Huawei, said Sam Howell, who researches quantum information science at the Center for a New American Security’s Technology and National Security program.
“These new restrictions from what we understand so far would include items below the 5G level,” she told VOA. “So 4G items, Wi-Fi 6 and [Wi-Fi] 7, artificial intelligence, high performance computing and cloud capabilities as well.”
Should the Commerce Department follow through with the ban, there will likely be pushback from U.S. companies whose revenues will be directly affected, Howell said. Currently Intel and Qualcomm still sell chips used in laptops and phones manufactured by Huawei.
Undercutting the revenue of these technology companies, which reduces R&D budgets and can lead to layoffs, must be carefully balanced by clear national security gains, said Paul Triolo, senior vice president for China and technology policy lead at the business advisory firm Albright Stonebridge Group.
“In the current climate of U.S.-China relations, that balancing act is being abandoned in favor of viewing technology transactions between the U.S. and China as largely zero sum,” he told VOA.
Huawei and Beijing have denied that they are a threat to other countries’ national security. Foreign ministry spokesperson Mao Ning accused Washington of “overstretching the concept of national security and abusing state power” to suppress Chinese competitors.
“Such practices are contrary to the principles of market economy” and are “blatant technological hegemony,” Mao said.
China has in the past held back on trade retaliations on U.S. actions targeting Huawei, Triolo noted.
“Any actions China would take now targeting the foreign business community would not align with moves towards opening up after zero-COVID policies were dropped, and portraying China as now more open for business,” he said.
Outcompeting Chinese tech
The latest U.S. move on Huawei is part of a U.S. effort to outcompete China in the cutting-edge technology sector.
In October, Biden imposed sweeping restrictions on providing advanced semiconductors and chipmaking equipment to Chinese companies, seeking to maintain dominance particularly on the most advanced chips. His administration is rallying allies behind the effort, including the Netherlands, Japan, South Korea and Taiwan – home to leading companies that play key roles in the industry’s supply chain.
U.S. officials say export restrictions on chips are necessary because China can use semiconductors to advance their military systems, including weapons of mass destruction, and commit human rights abuses.
The October restrictions follow the CHIPS and Science Act of 2022, which Biden signed into law in August and that restricts companies receiving U.S. subsidies from investing in and expanding cutting-edge chipmaking facilities in China. It also provides $52 billion to strengthen the domestic semiconductor industry.
Beijing has invested heavily in its own semiconductor sector, with plans to invest $1.4 trillion in advanced technologies in a bid to achieve 70% self-sufficiency in semiconductors by 2025.
TikTok a target
TikTok, a social media application owned by the Chinese company ByteDance that has built a massive following especially among American youth, is also under U.S. lawmakers’ scrutiny due to suspicion that it could be used as a tool of Chinese foreign espionage or influence.
CEO Shou Zi Chew is scheduled to appear before the House Energy and Commerce Committee on March 23 to testify about TikTok’s “consumer privacy and data security practices, the platforms’ impact on kids, and their relationship with the Chinese Communist Party.”
Lawmakers are divided on whether to ban or allow the popular app, which has been downloaded onto about 100 million U.S. smartphones, or force its sale to an American buyer.
Earlier in January, Congress set up the House Select Committee on China, tasked with dealing with legislation to combat the dangers of a rising China.
U.S. Secretary of State Antony Blinken is meeting his Chinese counterparts next week in Beijing, his first visit since 2018, to maintain open lines of communication amid rising U.S.-China tensions.