Commentary on Political Economy

Saturday 8 June 2019


China will establish a mechanism for export control of sensitive technology, the official Xinhua news agency said on Saturday. The mechanism would “prevent and resolve national security risks”, Xinhua said. Details would be released soon, it added. The announcement comes amid a souring of relations with the US after the most recent round of trade negotiations ended without a deal in May. Since then, the Trump administration has blacklisted Chinese telecommunications equipment maker Huawei, while China has threatened to punish foreign companies that cut off ties with Huawei by listing them as “unreliable”. The new Chinese regulations could prove similar to US export controls on strategic technologies. Those controls — covering military equipment, some encryption technologies, and some dual-use products — have long irked China. Chinese negotiators have often claimed that their trade surplus could be trimmed if the US would relax controls on high-tech goods.  The mechanism will be developed by the National Reform and Development Commission under the guidelines of China’s national security law, passed in 2015, Xinhua said. “This is a major step to improve [China’s system] and also a move to counter the US crackdown,” tweeted Hu Xijin, editor-in-chief of the Global Times, a nationalist tabloid that is sometimes used to float ideas that are not official policy. “Once taking effect, some technology exports to the US will be subject to the control.” Recommended Lex Rare earths/trade war: elemental powers Last month, the NDRC implied it would block exports of rare earths, a material with many strategic applications. After the trade talks broke down in May, Chinese president Xi Jinping visited a manufacturer of rare earths magnets, used in electric vehicles and other new technology applications, as a reminder that China holds some trump cards of its own. Rare earth are used in smartphones, lasers, instrument panels, wind turbines and MRI machines and more than 90 per cent of hybrid and electric cars.

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