Commentary on Political Economy

Thursday, 15 April 2021

 

Biden Follows Trump With Tight Curbs on U.S. Tech Sales to China

  • Administration deepening export controls on sensitive products
  • Big decisions loom on Commerce actions inherited from Trump

President Joe Biden has ditched many of his predecessor’s policies, but he agrees with Donald Trump on the need to limit exports of U.S. technology to China.

Last week, the Biden administration added seven Chinese supercomputing firms to the list of entities that U.S. businesses can’t sell to without special permission. It was an expansion of the crackdown that began under Trump with curbs on exports to Chinese companies like Huawei Technologies Co.

That may signal a wider continuity in the U.S. stance toward China, its biggest economic rival. The Biden team is still reviewing the China policies it inherited from Trump -- including tariffs on more than $300 billion in annual imports, and a partial trade deal -- but has indicated that its strategy will be broadly similar.

Commerce Secretary Gina Raimondo said this month that Beijing “ doesn’t play fair,” and that the U.S. has to do what it takes to ensure American workers “have a shot.”

“The Biden administration appears as though it’s following many of the Trump administration’s policies with respect to China, and in some cases strengthening them,” said Cordell Hull, who led the Bureau of Industry and Security, the Commerce Department agency in charge of export controls, from November 2019 to December 2020. “They’re wrestling with what is a very complex issue. Time will tell whether their current posture holds, but I suspect it will.”

Biden has criticized aspects of Trump’s approach, which often involved announcing unilateral actions via surprise posts on Twitter. But there’s little support among either Democrats or Republicans for easing the pressure on China.

Export controls have been a tool of American foreign policy since at least the Cold War, when Congress enacted limits for national-security purposes to prevent sensitive goods being sold to the Soviet Union. American suppliers need U.S. government licenses if they plan to sell their technology to a business on the so-called entity list.

WATCH: The U.S. Senate has introduced a new bill which directs the government to adopt the policy of “strategic competition” with China. Emily Wilkins reports. (Source: Bloomberg)

Biden’s new curbs go beyond expansion of that list. In March, the BIS informed some Huawei suppliers that it was tightening conditions on previously approved export licenses, prohibiting items for use in or with 5G devices.

The Commerce Department also said it will go ahead with a Trump-era proposal that allows it to block transactions involving “foreign adversaries,” and the department has issued subpoenas for several Chinese information technology and communications providers as part of a review of potential national security risks.

Here’s a look at some other areas where Biden may take action as his administration weighs whether to maintain, remove or build on Trump’s measures against China.

Digital Payment Apps

On Jan. 5, Trump signed an executive order banning U.S. transactions with eight Chinese digital-payment apps including Ant Group Co.’s Alipay and Tencent Holdings Ltd.’s digital wallets -- saying the move could help prevent personal information like texts, calls and photos from being gathered by an adversary.

The Biden administration didn’t implement that order before February’s deadline, and has given no indication on whether it plans to move ahead. If it does, the Commerce Department will need to draft rules outlining which payments will be outlawed.

The order targets Tencent’s QQ, QQ Wallet and WeChat Pay, as well as lesser-known apps CamScanner, SHAREit, VMate and WPS Office.

Military Companies

On Nov. 12, Trump signed an order banning American investments in Chinese firms owned or controlled by the military. Under that measure, trading in the relevant securities was barred with effect from Jan. 11.

On Jan. 27, a week after Biden took office, the Treasury Department’s Office of Foreign Assets Control announced that it will extend the wind-down period within which such transactions are permitted until May 27.

If the U.S. determines additional companies have military ties in the future, American investors will be given 60 days from that determination to divest. Trump administration officials decided against banning investment in Alibaba Group Holding Ltd. and Tencent as part of the January order.

TikTok and WeChat

On Aug. 6, Trump signed executive orders barring U.S. residents from doing business with the Chinese-owned TikTok and WeChat platforms, citing the risk of leaving Americans’ personal data exposed.

Later in the month, Trump ordered TikTok owner ByteDance Ltd. to sell its U.S. assets after an investigation by the Committee on Foreign Investment in the U.S., which reviews proposed acquisitions of American businesses by overseas investors for national security concerns.

The Biden White House hasn’t said if it sees the collection of Americans’ data as a security risk. But in February, the administration signaled it would slow down the unwinding of TikTok’s U.S. operations, asking a federal judge to pause a lawsuit over Trump’s ban of the popular video app until the review of China policies is complete.

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