US commerce chief warns of China export controls impacting companies’ revenue
US commerce chief warns of China export controls impacting companies' revenue
The Biden Administration’s Approach to U.S. Controls on Exports to China
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In a recent forum, Commerce Secretary Gina Raimondo shed light on the Biden administration’s strategy for carefully targeting U.S. controls on exports to China. While these restrictions may result in some revenue losses for American companies, the aim is to strike a balance between safeguarding national security interests and maintaining the competitiveness of U.S. businesses.
Raimondo emphasized the need to avoid imposing excessively broad restrictions that could drive Chinese buyers to seek alternative sources for the desired products. “We don’t want to deny American companies revenue and China can get the product elsewhere, or China can get the product from other countries,” she explained. However, she acknowledged that there may be a trade-off between revenue and security considerations, stating, “we think it’s worth it.”
The discussion around U.S. controls on exports to China has gained momentum, with executives from major U.S. chip companies meeting with top Biden administration officials, including Raimondo, to address China policy concerns. The Semiconductor Industry Association, the most powerful semiconductor lobby group, has also called for a halt to any additional measures under consideration.
Securing American national security interests while avoiding harm to U.S. businesses is a priority for the administration. Raimondo emphasized the need for ongoing dialogue with companies to identify the appropriate balance that achieves these goals. “We’re meeting with companies to get to the right place so we don’t damage American business but, quite frankly, protect American national security,” she stated.
A crucial element in the discussion is the significance of the Chinese market for U.S. chip companies. China accounted for $180 billion in semiconductor purchases last year, almost a third of the global total. Nvidia, Qualcomm, and Intel, three prominent chip manufacturers, heavily rely on sales to China. It is worth noting that Qualcomm is currently the only company with a license from U.S. regulators to sell mobile phone chips to Huawei.
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The Biden administration is exploring options for updating the existing set of rules that were imposed in October last year to curtail China’s chip industry. Additionally, a new executive order aimed at restricting certain outbound investment is under consideration. However, Raimondo clarified that the purpose is not to impede China’s progress or deny them access to basic technology. The concern arises from China’s intention to leverage the advanced technology from the United States to bolster its military capabilities, an outcome the administration wants to prevent.
Raimondo emphasized that while the administration is eager to implement changes swiftly, the priority is to ensure accuracy and effectiveness. “The timetable is as fast as we can and make sure that it is correct.”
In the recent meetings between government officials and representatives from Intel, Qualcomm, and Nvidia, Secretary of State Antony Blinken, National Economic Council director Lael Brainard, and National Security Council director Jake Sullivan were also present. These discussions present valuable opportunities to align the perspectives of both the public and private sectors in order to establish a comprehensive and balanced approach to U.S. controls on exports to China.
Overall, the Biden administration’s approach to U.S. controls on exports to China aims to strike a delicate balance between protecting national security interests and ensuring the prosperity of American businesses. By engaging in dialogue with companies and considering viable alternatives, the administration seeks to navigate the complex landscape of international commerce while mitigating potential risks.
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