China erects “technology firewall” to protect its technological innovations
June 11, 2019 Category China News Round-up, Weekly
The National Development and Reform Commission (NDRC) announced that it would establish a technology export control list to protect China’s technological achievements against countries who would try to use them to hinder China’s economic development. Apart from the announcement itself, no further details were given. Analysts described the measure as a technology export control measure to limit if needed exports of sensitive technology. The NDRC said it is organizing a study to establish a national technological security management list system to “more effectively forestall and defuse national security risks”.
“Without the list system, China was defending passively from U.S. tech offensives. But with such a list, China will become more legally prepared so that it can hit back swiftly and intelligently against the U.S.,” Huo Jianguo, Vice Chairman of the China Society for World Trade Organization Studies, told the Global Times. Huo predicted that the list system will be a dynamic one with a small scope of “strategically important” technologies that are at the heart of U.S. firms, such as rare earths, nuclear technology, 5G technology, drones and the aerospace industry.
Tommy Wu, Senior Economist at Oxford Economics, said Beijing’s latest move was yet another step in expanding its arsenal in the trade war with Washington, along with doubling down on efforts to produce home-grown technology. “So far it looks like the list system could be used to impose tech export controls that may target specific U.S. companies on the grounds of national security. A further escalation of tech conflict will certainly put more downward pressure on the sector especially in the near term. But the bigger picture is that China will strive to become more technology independent in any case, and Asia’s supply chain is going to see some relocations.”
Wei Zongyou, International Relations Professor at Fudan University, said China now appeared poised for a more drawn-out conflict with the U.S., as it went “a tooth for a tooth” against U.S. President Donald Trump’s administration. “The U.S. has enacted technology export controls for decades, so if China is planning to do it, it is learning from the U.S.,” he said. “Although we cannot rule out China and the U.S. reaching some agreement, China appears to be ready for a long-term trade war with the U.S.”
Chinese authorities summoned global technology firms for talks last week, and Microsoft said it was made clear to the firm that complying with U.S. bans would likely lead to further complications for all sector participants, Reuters reported. Also summoned to meetings were Dell Technologies, Samsung Electronics, SK Hynix, and chip designer ARM, which last month halted supplies to Huawei.
The new technology export management list is separate from the soon to be released list of “unreliable foreign entities that undermine Chinese firms’ interests”.
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