While the Trump administration takes tough measures to limit Chinese state-run companies’ access to U.S. technology and market, the European Union is in the final stages of signing a major investment pact with Beijing by the end of 2020.
The White House on Friday added China’s leading chipmaker SMIC to the list of over 60 Chinese companies barred from doing business in America. The measure is part of an executive order signed by President Donald Trump in November aimed at banning companies tied to China’s military from acquiring U.S. technology.
Beijing is “increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses,” the executive order said. The order, set to come into effect in early January, targets Chinese companies that pose a threat to U.S. national security.
China is pursuing a strategy of “Military-Civil Fusion,” the White House believes. The communist regime is boosting “the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities,” the executive order added.
“The United States will use all countermeasures available, including actions to prevent (Chinese) companies and institutions from exploiting U.S. goods and technologies for malign purposes,” Secretary of State Mike Pompeo said in a statement on Friday.
The Associated Press reported the latest move by the Trump White House:
The Trump administration blacklisted China’s top chipmaker Friday, limiting the Semiconductor Manufacturing International Corp.’s access to advanced U.S. technology because of its alleged ties to the Chinese military.
“We will not allow advanced U.S. technology to help build the military of an increasingly belligerent adversary,” Commerce Secretary Wilbur Ross said in a statement explaining the decision to put SMIC on the U.S. government’s so-called Entity List. (…)
Commerce is putting more than 60 other firms on the list for such things as allegedly supporting the Chinese military, assisting the Chinese government’s crackdown on dissent, being involved in the theft of trade secrets and helping Beijing’s aggressive efforts to claim territory in the South China Sea. Among them is Chinese dronemaker DJI, sanctioned for allegedly helping the Chinese government conduct surveillance on its own citizens. But SMIC is the most high-profile target.
The move means that U.S. companies will need to get a license to sell sophisticated technology to SMIC. Technology that helps with the production of the most-advanced chips — those 10 nanometers or smaller — face the “presumption of denial,” Commerce said. Other items will be assessed on a case-by-case basis.
While the Trump administration is rolling back China’s footprint in critical sectors of the U.S. economy, Europe is opening itself further to Beijing by inking a major deal in coming weeks.
Chancellor Angela Merkel’s government is the driving force behind the new EU-China investment pact set to be inked by the end of the month, news reports suggest. “An EU official also said a deal was close after a push from Germany, which holds the EU presidency until the end of the year and is the biggest European exporter to China,” the Reuters news agency reported on Friday.
China is equally upbeat about a favorable deal with Brussels. Chinese Communist Party-run newspaper The Global Times described the EU-China agreement as “a landmark deal closely binding the economic interests of China and Europe.” The deal is “expected to be signed at the end of 2020 before Joe Biden formally takes his oath as US president in January,” the communist daily assured.
The Reuters reported the finalizing of the Brussels-Beijing investment pact:
The European Union and China aim to reach an investment accord by the end of 2020 that would grant European companies greater access to the Chinese market after six years of talks, officials and diplomats said on Friday.
Potentially a big step in repairing Sino-European ties after the coronavirus outbreak in China and Beijing’s crackdown in Hong Kong, the EU-China Comprehensive Agreement on Investment would put most EU companies on an equal footing in China. (…)
“Negotiations are now in their final stages,” Wang Wenbin, a spokesman at the Chinese foreign ministry, said on Friday.
An EU official also said a deal was close after a push from Germany, which holds the EU presidency until the end of the year and is the biggest European exporter to China.
Instead of decoupling its supply chain, Europe has increased it dependency on China in the wake of the Wuhan pandemic. In 2020, China surpassed the U.S. as Europe’s leading trading partner. “Over the first nine months of 2020, trade between the EU and China totalled €425.5 billion, while trade between the EU and the United States came in at €412.5 billion,” the Belgian news website Euractiv reported earlier this month.
Europe’s growing dependence makes it vulnerable to China’s blackmail. Chinese penetration of Europe’s 5G wireless network, which will also regulate military logistics and communications, poses a major security threat to the U.S. and allied nations.
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