U.S.-China Tech decoupling accelerates with new export controls on Chinese quantum computing companies

(LawfareBlog) Decoupling between the United States and China accelerated in late November as both countries adopted new trade restrictions against the other. On Nov. 24, the U.S. Commerce Department announced export controls on eight Chinese quantum computing companies. Bloomberg earlier reported on new import controls created by a quasi-governmental Chinese industry panel known as the “Xinchuang committee,” which effectively blacklists technology companies that are more than 25 percent foreign-owned from supplying sensitive industries.
The Commerce Department stated that it added the eight Chinese quantum computing companies to the Entity List in an effort to “prevent U.S. emerging technologies from being used for the [Chinese military’s] quantum computing efforts.” American companies are barred from exporting certain products to companies on the Entity List without applying for a special license from the Commerce Department; such licenses are rarely approved. The list was created in the late 1990s to address weapons proliferation, but it has since evolved into a general tool to protect U.S. security and economic interests.
Chinese analysts have argued that the Xinchuang committee and China’s broader push for technological self-reliance are a direct result of the U.S. export controls. Chinese internet research firm iResearch stated in a report in July that “U.S. choke-hold policies, exemplified by the Entity List, were the direct catalyst that pushed China to build the Xinchuang sector …. [The Entity List] underlined the urgency for China to invest more in technology innovation and have the key technologies made in China.”
China has made antitrust enforcement a priority in its recently published five-year plan for the development of rule of law in the country, suggesting that Beijing’s regulatory scrutiny over the anticompetitive behavior of Chinese tech giants could be the new normal. The newfound vulnerability of Chinese Big Tech to regulatory attacks has thus far facilitated their cooperation with the government on a wide variety of policy objectives and may prove instrumental in advancing Beijing’s broader goal of technological self-sufficiency.