After the National Day holiday, there have been new developments in the chip rivalry between China and the United States.

On the Chinese side, China continues to strengthen its export controls on rare earths, this time targeting 14nm chips and memory chips. The Ministry of Commerce has issued a decision on the export control of rare earths and rare earth technologies. The target is the export applications for rare earths and related technologies used in the research and development, production of logic chips with 14nm or smaller, or memory chips with 256 layers or more, as well as equipment, testing equipment, and materials for manufacturing such semiconductor processes, or the research and development of artificial intelligence with potential military applications, which require case-by-case approval.

On the American side, 16 Chinese companies have been added to the Entity List, including several chip distributors.

China: Strengthening Export Controls on Rare Earths and Rare Earth Technologies

In the "Announcement by the Ministry of Commerce on the Decision to Implement Export Controls on Related Rare Earth Technologies," it was mentioned:

One, the following items shall not be exported without permission:

(1) Technologies and their carriers related to rare earth mining, smelting separation, metal smelting, magnet material manufacturing, and recycling of secondary rare earth resources (Control Code: 1E902.a)

(2) Technologies related to the assembly, commissioning, maintenance, repair, and upgrading of production lines for rare earth mining, smelting separation, metal smelting, magnet material manufacturing, and recycling of secondary rare earth resources (Control Code: 1E902.b)

If an exporter knows that non-controlled goods, technologies, or services are used or substantially assist in rare earth mining, smelting separation, metal smelting, magnet material manufacturing, or recycling of secondary rare earth resources activities abroad, according to Article 12 of the "Export Control Law of the People's Republic of China" and Article 14 of the "Regulations on the Export Control of Dual-Use Items of the People's Republic of China," they should apply for a dual-use item export license before exporting. Without permission, they may not provide them.

In another announcement, the target of the rare earth export control became more explicit.

In the "Announcement by the Ministry of Commerce on the Decision to Implement Export Controls on Related Rare Earth Items Abroad," it was mentioned:

First, any overseas organizations and individuals (hereinafter referred to as "overseas specific exporters") must obtain a dual-use item export license issued by the Ministry of Commerce of China before exporting the following items to countries and regions outside of China:

(1) Items containing, integrated with, or mixed with items listed in Part I of Annex 1 of this announcement manufactured abroad, and items listed in Part II of Annex 1 of this announcement manufactured abroad, where the value proportion of the items listed in Part I of Annex 1 of this announcement in the items listed in Part II of Annex 1 of this announcement reaches 0.1% or more;

(2) Items listed in Annex 1 of this announcement produced abroad using technologies related to rare earth mining, smelting separation, metal smelting, magnet material manufacturing, and recycling of secondary rare earth resources originally from China;

(3) Items listed in Annex 1 of this announcement originally from China.

Second, export applications to military users abroad, and to importers and end-users listed on the controlled list and the watch list (including their subsidiaries, branches, etc., with a holding of 50% or more), will generally not be approved.

Third, export applications for or potentially used for the following final uses will generally not be approved:

(1) Design, development, production, and use of mass destruction weapons and their delivery systems;

(2) For terrorist purposes;

(3) For military use or to enhance military capabilities.

Fourth, export applications for the research and development, production, and use of logic chips with 14nm or smaller, or memory chips with 256 layers or more, as well as the production equipment, testing equipment, and materials for the above process semiconductors, or the research and development of artificial intelligence with potential military applications, will be reviewed on a case-by-case basis.

Regarding the strengthening of export controls on rare earth-related items, the spokesperson for the Ministry of Commerce of China responded:

Rare earth-related items have dual-use properties, and implementing export controls on them is a common international practice. In April this year, the Chinese government implemented export controls on rare earth items exported by Chinese organizations and individuals. Relevant rare earth technologies were already included in the "List of Prohibited and Restricted Export Technologies of China" as early as 2001.

Over a period of time, some overseas organizations and individuals have directly or processed and then transferred or provided original Chinese rare earth control items to relevant organizations and individuals, directly or indirectly used for sensitive areas such as military, causing significant damage or potential threats to China's national security and interests, and having adverse effects on international peace and stability, also damaging international efforts to prevent proliferation. Therefore, the Chinese government has legally imposed controls on certain foreign rare earth-related items containing Chinese components, with the aim of better safeguarding national security and interests, and better fulfilling international obligations such as non-proliferation.

As a responsible major country, China's implementation of controls on relevant items reflects its firm commitment to maintaining world peace and regional stability, and actively participating in international efforts to prevent proliferation. China is willing to communicate and cooperate with all parties through multilateral and bilateral export control dialogue mechanisms, promote compliant trade, and ensure the safety and stability of the global supply chain. It should be noted that the scope of items included in the control is limited, and multiple licensing convenience measures will be taken. For those that meet the relevant regulations, the Chinese government will grant permission; for exports with final uses for emergency medical care, responding to public health emergencies, natural disaster relief, and other humanitarian rescue operations, the application for licenses will be exempted. In addition, considering the actual needs of all interested parties to fulfill existing commercial contracts and meet compliance requirements, this policy sets a reasonable transition period.

The United States has added 16 Chinese enterprises to the Entity List, including several electronic component distributors

Even more so, the U.S. side is not calm. The number of entities added to the "Entity List" continues to increase. This time, among the 16 newly added Chinese enterprises, there are several Chinese chip distributors, including multiple subsidiaries of Arrow Electronics in China.

On October 8, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced a notice, adding 26 entities and 3 addresses to the Entity List. Among them, 16 are mainland Chinese enterprises and 3 are addresses in Hong Kong, China.

The range of 16 enterprises is extensive, including both large global electronic component distributors like Arrow's mainland and Hong Kong subsidiaries, as well as a series of small and medium-sized technology and trade enterprises.

Regarding the actions of the United States, China has expressed its position multiple times. The spokesperson for the Ministry of Commerce previously stated: China has noticed the situation. The U.S. continues to generalize the concept of national security and abuse export control measures, adding multiple Chinese entities to the export control "Entity List", which China firmly opposes. The U.S. move aims to suppress and hinder other entities, depriving them of their right to development, seriously damaging the legitimate rights and interests of the relevant entities, and disrupting the safety and stability of the global supply chain. This move by the U.S. is not conducive to creating an atmosphere for both sides to resolve issues through dialogue and cooperation. China urges the U.S. to immediately stop its wrong practices and take necessary measures to resolutely protect the legitimate rights and interests of Chinese entities.

The Foreign Ministry spokesperson Guo Jia Kun previously stated: The U.S. abuse of "Entity List" and other export control tools, using the excuse of "harming U.S. national security and violating U.S. foreign policy", imposing illegal unilateral sanctions, is a typical act of hegemonism, seriously violating international law and the basic principles of international relations, seriously harming the legitimate rights and interests of enterprises, and undermining the safety and stability of the global supply chain. China firmly opposes this and strongly condemns it.

We urge the U.S. to stop generalizing the concept of international security, stop politicizing, instrumentalizing, and weaponizing economic and trade science and technology issues, and stop abusing various sanction lists to unjustly suppress Chinese enterprises. China will take necessary measures to resolutely protect the legitimate rights and interests of Chinese enterprises.

Original article: https://www.toutiao.com/article/7559225884872344106/

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