US sets out new powers to block Chinese technology


The US commerce department has finalised new rules to make it easier for the federal government to block Americans from importing technology from China and other US adversaries that it decides could threaten national security.

The new rule, covering software such as that used in critical infrastructure and hardware including drones and surveillance cameras, gives new powers to the commerce secretary to issue licences or block imports.

Although it also applies to technology imports from Iran, Russia, North Korea, Cuba and the Venezuelan regime of Nicolás Maduro, the main impact is aimed at China — the latest in a string of actions in the final days of the Trump administration designed to raise pressure on Beijing.

The rule will come into effect in 60 days and implements an order that Mr Trump signed in 2019 to protect US supply chains related to communications technology and services.

“President Trump has been committed to protecting the national security of all Americans, and the implementation of this rule is a pivotal moment in this administration’s efforts to put America First and hold bad actors accountable,” said Wilbur Ross, US commerce secretary.

The move came on the same day the commerce department placed the Chinese National Overseas Oil Corporation on the “entity list” — a blacklist that will make it difficult for US companies to export equipment or technology to the company. Mr Ross said Cnooc acted as “a bully” for the Chinese military to facilitate the intimidation of China’s neighbours.

Referring to the new technology import rule, a commerce department official pointed to recent examples of hacking that illustrated the risks to US supply chains.

The US justice department last year indicted two Chinese individuals working with the Ministry of State Security — the Chinese intelligence service — for allegedly running a global hacking campaign to target US intellectual property. The official said the US wanted to highlight to companies that they needed to do more due diligence with respect to technology imports.

The rule applies to six categories of technology — software and hardware — ranging from products used in critical infrastructure and telecoms networks to artificial intelligence and quantum computing.

It could also apply to apps that collect user data or, for example, drones and network surveillance cameras that use cloud services to store data.

Under the rule, US government agencies can refer concerns to the commerce department, which could then approve the imports, block them or require changes to mitigate any risk. The rule also provides a mechanism to apply for a licence before importing technology to avoid the risk of having it rejected later on.

The focus on China comes at the end of an administration that has taken many aggressive measures to clamp down on what it says are threats posed by Chinese-owned technology. These have included banning the use of technology from Huawei, and an attempt to bar Americans from using TikTok, the popular short-video app — although the latter effort has been stymied by the courts.

The Pentagon is also preparing to add more Chinese companies to a list of firms with suspected ties to the Chinese military. Under an order issued by Mr Trump in November, Americans are barred from investing in the securities of those designated Chinese companies and many of their subsidiaries.

Two people familiar with the situation said the Pentagon would add nine Chinese firms to that list, potentially as early as Thursday.

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