In a statement, the Department of Commerce said the ban on the firms stems from China's military-civil fusion doctrine – as evidenced by activities between SMIC and "entities of concern in the Chinese military-industrial complex."
Commerce Secretary Wilbur Ross confirmed the move in a Dec. 18 morning interview with Fox Business. In a follow-up statement to The Wall Street Journal Ross stated that the "restrictions are a necessary measure to ensure that China … is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities."
A senior Commerce Department official told the WSJ that the policy was designed to prevent SMIC from using U.S. technology to create chips for advanced military applications such as drones, military aircraft and exoskeletons. The official added that the department is taking the action "to address a national security concern."
In his statement, Ross confirmed that Chinese entities that "enable human rights abuses," "support the militarization and unlawful maritime claims in the South China Sea," those that acquired items from the U.S. "in support of the People's Liberation Army (PLA) programs" and those who "engaged in the theft of U.S. trade secrets" were also affected by the restrictions. (Related: New report shows China using students to steal American tech.)
The Trump administration has added more than 300 Chinese entities to its export blacklist since January 2017, as part of its ongoing trade war with Beijing.
China slams blacklisting as "arbitrary suppression"
Chinese officials did not take too kindly to the U.S. government's latest move.
In a Dec. 18 video address to the Asia Society, Chinese Foreign Minister Wang Yi took note of the expanding list of U.S. sanctions. Wang, who also serves as a state councilor, called on Washington to stop its "arbitrary suppression" of Chinese firms. His office later warned that the blacklisting would serve as evidence of American oppression and that Beijing would continue to take "necessary measures" to protect their rights.
Meanwhile, Foreign Ministry Spokesman Wang Wenbin also brought the issue up during a Beijing news conference on the same day.
"We urge the U.S. to cease its mistaken behavior of unwarranted oppression of foreign companies," he stated.
Treasury Department seeking to loosen restrictions on Chinese firms
Even as the Commerce Department enacts its ban, the Department of the Treasury is attempting to dilute an executive order by President Donald Trump that prevents Americans from investing in Chinese companies with ties to the PLA. This includes several companies included in the Commerce Department's blacklist.
The Department of State and Department of Defense have opposed the Treasury Department's effort, as it wanted to exclude Chinese subsidiaries. The two departments argued that not including Chinese subsidiaries would significantly weaken the overall impact of Trump's mandate. Both the Pentagon and the State Department did not respond to requests for comment.
Trump's executive order, together with that of the Commerce Department's move, is part of a broad push to counter China's "military-civil fusion" strategy. Under the strategy, Chinese companies are required to share technology with the PLA. According to the administration, American investors who invest in Chinese companies are complicit in undermining U.S. national security.
Secretary of State Mike Pompeo raised concerns about China's "military-civil fusion" program through a statement accompanying a fact sheet on the matter. Pompeo's statement said money flowing into index funds supports Chinese entities involved in "both civilian and military production" and human rights abuses.
"The U.S. will use all countermeasures available, including actions to prevent [Chinese] companies and institutions from exploiting U.S. goods and technologies for malign purposes," he stated.
NationalSecurity.news has more details about how the Chinese government appropriates U.S. technology for its own ends, and our eventual demise.
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