US Blacklist of China’s Tech Giants May Accelerate Decoupling, Experts Say
On January 5, the Biden administration added Tencent Holdings Ltd. And CATL to its list of “Chinese military companies,” expanding the US blacklist China and intensifying economic tensions.
Chinese companies blacklisted by US, specifically the latest targeting Tencent, a global leader in gaming and social media, and CATL, a key battery supplier, depicts US intent to counter China’s “military-civil fusion” strategy and protect national security.
The US blacklisting Chinese companies and its implications go beyond defense, igniting fearsome worries of disrupted supply chains and strained global partnerships in technology-dependent industries – setting the stage for deeper scrutiny of the Pentagon’s expanded blacklist.
Yet Another Addition to the US Federal Blacklist
The Pentagon’s updated list includes 134 companies, four of which US blacklisted Chinese companies are top 20 by market value, with a combined worth nearing $1 trillion. The designation imposes no direct sanctions but rather discourages US companies from engaging with the firms, potentially disrupting supply chains.
Before, it was a matter of if the US blacklist Tencent, now, the world’s biggest Chinese gaming developer became the latest entrant to the list, and CATL, a key Tesla battery supplier. Other entries are memory chip maker Changxin Memory Technologies Inc., AI company SenseTime Group Inc., and oil giant Cnooc Ltd.
Washington, under the Biden administration accuses these companies of indirectly helping China’s military modernization by supporting its “military-civil fusion strategy,” which melds civilian technologies with the Chinese People’s Liberation Army (PLA) capabilities.
Global Consequences and Vulnerability Critics warn the American blacklisting of more of China’s giants could isolate the US from global markets.
Former UN ambassador to Singapore, Kishore Mahbubani, warned that “if the US tries to decouple from Chinese companies and their global reach, the US is not just decoupling from China; it is decoupling from the rest of the world, too.”
The demise of the deal questions how the new Trump administration will handle any of the US blacklist China relations. Trump has appointed Marco Rubio, an advocate of tighter restrictions on Chinese companies, as his secretary of state, hinting at a hard line. Yet others say President-elect Trump may prove to be more pragmatic, weighing security concerns against economic realities.
Technology, Trade, and Geopolitical Havoc
The US Federal Register blacklist is, without a doubt, intensifying technology competition, with export bans trying to deny Chinese access to key semiconductors and AI technologies. In response, Beijing has retaliated through the imposition of its own export controls on high-tech materials.
The Biden administration framed its approach as a “small yard, high fence” strategy targeting trade restrictions on sensitive military technologies.
It is hard to find such lines, though, when the list includes customer-focused companies like Tencent whose technology products have generally been aimed at consumers, highlighting the difficulty in defining national security in a technologically connected world. It underscores, with each passing day, the immense complexity of truly defining national security threats based on the companies’ products.
More turbulence might be in store for the global technology landscape as the US blacklist Chinatech companies continues to wrestle its tough balancing act between strategic objectives and economic partnerships.
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