China has lodged new tough laws to control the export of “controlled items”. The rules primarily target the export of military technologies and other products that might threaten Chinese national security. The trade restrictions are widely believed to be a reaction to similar trade sanctions introduced by Trump administration. Tencent, TikTok and Huawei are among the victims of Washington’s Chinese technology crackdown. There are concerns the new measures coming into effect on Tuesday could escalate the ongoing trade war between Beijing and Washington.
Trade tensions between the world’s two biggest economic giants emerged in 2018 but have seen an intense rise this year.
Tech cold war
The departing President Donald Trump’s administration has signed on executive orders against a number of Chinese firms arguing they could share data of its citizenry with Chinese government.
China’s new export restrictions are “a reaction to this escalation of the tech war and it’s China looking to cover its own advantages”, said Alex Capri, visiting professor at the National University of Singapore.
Talking to BBC’s Asia Business Report, Capri added: “The other thing I find really interesting is China has placed AI and algorithms under these export controls.
“This was prompted by the US ban on TikTok. The Chinese government does not want to share this AI.”
Capri believes the ongoing trade war between the two nations will remain on the same trajectory under the new Democratic administration in United States. “We’re in a cold war with China – it’s a tech cold war,” he said.
What exactly are the new laws?
The Export control law covers several categories of “controlled items”, which include nuclear and military related exports and dual use goods utilized for both military and civilian usage. The legislation also contains the items that can endanger national security of Communist Republic. Exporters would have to get a license in order to export any item included in the exit control list or under temporary controls. Data linked with the controlled items is also targeted int the law. The law if breached may result in penalties of ten times the value of the offending transaction up to – $760,000 – carried by the offender. It also approves of the punishment of overseas organizations or individuals involved in the acquisition of sensitive technology globally.
Price for rare earth minerals have soared in anticipation that the law could halt their export. China is the world’s largest exporter of the rare earth minerals used in manufacturing the products ranging from consumer electronic appliances to wind tribunes.
“China has a massive overwhelming advantage when it comes to rare earths,” said Capri. “Essentially, over the past 30 years, the ability to extract rare earths lies with China. It’s going to be hugely important when it comes to jet fighters, automotive, etc.”