World ECR | China strikes back at US for adding 140 companies to list

China announced new restrictions on exports of dual-use products to the United States in response to Washington adding 140 companies to its Entity List over concerns about advanced semiconductor technology.

China reacted after the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced it was adding 140 companies to its Entity List, targeting entities involved in the development of advanced semiconductors and China’s military modernization. These changes are consistent with U.S. national security and foreign policy interests under Section 744.11 of the Export Administration Regulations (“EAR”).

“These entities support the development or production of military end-use integrated circuits (ICs),” the Dec. 2 notice states. These include entities from China, Japan, South Korea and Singapore, nine of which received special “Footnote 5” designations that extend U.S. export controls to certain foreign-produced products.

The notice said the affected entities are committed to the development of “advanced node integrated circuits,” or semiconductor manufacturing tools, and support China’s military-civilian fusion (“MCF”) strategy. The new rule also modifies 14 existing Entity List entries to include the Footnote 5 restriction and removes three entities from the Verified End User (“VEU”) program.

In addition, the Bank for International Settlements has introduced two new foreign direct product rules (“FDP”). The first measure is to impose controls on foreign-produced semiconductor manufacturing equipment (“small and medium-sized enterprises”) shipped to Macau or the D:5 country group. Article 2 applies to entities listed in footnote 5, limiting their ability to acquire items derived from U.S. technology. “The Small Business FDP and FN5 FDP ​​rules ensure that critical U.S. technology remains controlled when used abroad for purposes contrary to U.S. security interests,” BIS explained in two related notices.

BIS also created a new export control classification number (ECCN 3A090.c) to regulate high-bandwidth memory (“HBM”) with densities exceeding 2 GB/s per square millimeter. Corresponding license exceptions to HBM will allow export to certain U.S. and allied facilities.

For certain Entity List-related requirements, these changes take effect on December 2, with a compliance deadline of December 31, 2024. BIS estimates that the expanded controls will generate approximately 200 additional license applications per year.

At the same time, China stated that it had once again updated its semiconductor export controls and sanctioned Chinese companies to maliciously suppress China’s technological progress and lodged a serious protest with the United States. Foreign Ministry spokesperson Lin Jian said that such practices seriously disrupt the international economic and trade order, undermine the stability of global industrial and supply chains, and harm the interests of all countries. China calls on the United States to respect the laws of market economy and the principles of fair competition. We will take necessary measures to firmly safeguard our own security and development interests.

His comments came as the Department of Commerce (“Commerce”) issued a notice on December 3, countering China’s own export controls, “prohibiting the export of dual-use items to U.S. military users or for military purposes.”

“In principle, the export of dual-use items such as gallium, germanium, antimony, and superhard materials to the United States is not allowed; the statement stated that for the export of dual-use items such as graphite to the United States, stricter end-user and end-use review will be implemented, and Warning that “any person from any country or region who violates the above provisions and transfers or provides relevant dual-use items originating in the People’s Republic of China to organizations or individuals in the United States will be held accountable in accordance with the law.”