Senate bill restricts U.S. tech exports to China

New legislation would make it harder to sell certain technology products to China or Chinese-owned businesses, but it's not clear whether it would cut down on economic espionage.

handful of new technologies (Sergey Nivens/Shutterstock.com)

 

A new bill would severely restrict U.S. companies from selling a broad range of technologies to Chinese-owned entities.

The China Technology Transfer Control Act of 2019, introduced by Sen. Josh Hawley (R-Mo.), would place a large swath of technologies and intellectual property deemed "important to the national interest of the United States" on the Department of Commerce's export control list, forcing American companies to obtain a special license to sell their products to China or Chinese-owned entities.

The bill takes direct aim at technologies targeted in the Made in China 2025 plan, a 10-year strategy crafted by Beijing policymakers in 2015 to develop and promote domestic business in a number of emerging technology sectors, including artificial intelligence, quantum computing, robotics, semiconductors, lithium batteries and high-capacity computing.

The bill would also apply to any technology that or intellectual property that would "make a significant contribution to the military potential" of China or help the Chinese government violate human rights.

In a statement, Hawley pitched the bill as a tool to crack down on the theft of American technology secrets by the Chinese military.

"For too long, China has exploited American innovation to undermine our values and threaten our security," Hawley said. "This legislation is an important step toward keeping American technology out of the hands of the Chinese government and its military."

However, national security officials have said that the Chinese government acquires U.S. technology secrets through a number of legal and illegal pathways, from hacking and theft to using proxies who invest or outright purchase U.S. technology firms as well as through forced technology transfer policies for U.S. companies seeking to do business in China.

Rob Atkinson, president of the Information Technology and Innovation Foundation, a tech policy think tank, said it's one thing to object to policies that force U.S. companies to establish a joint venture with Chinese companies or open up their testing labs to the Chinese government. It's quite another to compel them to get a special license to sell their commercial products in China.

"We export a lot of semiconductors to China, are we really saying we don't want to do that anymore?" Atkinson asked. "I think that would be cutting off our nose to spite our face. There's a difference between sharing technology with the Chinese and selling products -- those are two separate things."

The Bureau of Industry and Security at Commerce already has export restrictions in place that prevent U.S. companies from selling commercial products to China that are "dual use" or would make "a direct and significant contribution" to Chinese military capabilities. The office kicked off a process late last year to update its Commerce Control List to account for newer, emerging technologies. The Departments of Justice and Treasury, meanwhile, are implementing a pilot program that would expand the review of foreign investment in U.S. firms that manufacture or work on "critical" technologies, focusing on technologies identified in China's Made in 2025 plan.

Atkinson said those processes should be given a chance to play out and expressed doubt that placing restrictions on such a broad spectrum of technology products from a single country would keep them out of the hands of the Chinese military.

"Most if not all of these products are made also by foreign competitors -- the Koreans, the Taiwanese or the Germans or the Israelis -- who [in many cases] don't have export controls to China," Atkinson said. "So, it's not as if somehow if we did this we would really be limiting the Chinese military's capabilities. They would still get these technologies, they just wouldn't be getting them from our companies."

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