Restrictions on US Businesses with a Chinese Footprint
The US plans an extension of trade restrictions on tech export to China that would hit military technologies and high-tech sectors in the middle of high geopolitical tension between both countries, according to recent reports.
With the ongoing geopolitical tension between China and the US, things may become even more difficult for the tech industry, especially the military aspects of it, as Washington is reportedly planning to extend trade restrictions. China curbs exports of drone equipment amid US tech tensions, further complicating the situation.
US Trade Restrictions High Priority Areas
Regardless of the result of the US presidential election, it appears the current Biden administration, and possibly future ones, is set to continue tightening trade regulations concerning technology and military tech exports to China.
According to reports from a recent US China business exchange held in September, the next wave of restrictions will hit four critical areas: military end-user rule, cloud computing, information and communications technology, and the Biosecure Act.
The Bureau of Industry and Security at the Department of Commerce (BIS) will increase scrutiny on military-related exports and further tighten restrictions on high-tech exports and critical technologies.
Out of all the tech export controls, the military end-user rule may be the most relevant, as it cuts directly to the core of the military technology trade between both countries. The rule will require a license for US companies exporting high-tech replacement parts that may have military applications in China, making it increasingly burdensome to ensure that customers aren’t affiliated with the Chinese military.
The US China Business Council warned that “the proposed rules are unilateral, with no counterpart in other countries,” highlighting potential challenges for China tech export companies operating globally.
Tech Export Industrial and Global Relations Impacts
These growing restrictions will increase the complicated relationship between Washington and Beijing concerning China high tech exports. For years, these two nations have depended on each other China relies on US technology for military advancements, while the US benefits from Chinese manufacturing. As restrictions tighten, this mutual dependency could unravel, especially as China tightens tech export rules amid TikTok talks, signaling a broader response from Beijing.
The military technology sector is especially vulnerable to these tensions. If trade restrictions continue to escalate, both the US and China could face significant setbacks in technological development. This situation may also push China to accelerate its own technology efforts, increasing competitive pressure between the two powers in high export.
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