To The Moon

AsianFin--The U.S. government on Thursday added 37 Chinese entities to its trade blacklist, citing national security concerns, with 11 of them accused of being connected with a suspected spy balloon that flew over sensitive areas of the United States last year.

Entities listed, including companies, research institutions, and others, face restrictions on engaging in business with U.S. firms. Prior approval from the U.S. Commerce Department is required for U.S. entities to acquire goods and technologies from these Chinese entities.

Out of the 37 listed, 22 are included due to their involvement in China's quantum technology advancements and their attempts to procure U.S.-origin items to enhance the country's quantum capabilities, according to BIS.

Additionally, some entities are linked to developments in China's nuclear programs or have been implicated in exporting controlled items to Russia amid its conflict with Ukraine.

State-owned China Electronics Technology Group is a top military equipment supplier, according to U.S. media.

"Today's action is another decisive step in addressing challenges posed by the People's Republic of China and its military modernization," Under Secretary of Commerce for Industry and Security Alan Estevez said in a statement.

He said the United States must remain vigilant in blocking such entities from accessing U.S. technologies that could be used to undermine its national security.

Under the regulations of U.S. Bureau of Industry and Security (BIS), U.S. companies need approval from the U.S. government to export, re-export, or transfer all products and technology under U.S. Export Administration Regulations (EAR) jurisdiction to these entities listed.

Industry professionals in the field of quantum technology told TMTPost that the inclusion of the University of Science and Technology of China in the "entity list" by the BIS will have a significant impact on its future academic research and the procurement of related scientific components.

At the same time, for the field of quantum computing, in the past decade, 10% of the demand for low-temperature superconducting quantum computing technology was in China, while 90% was overseas. Therefore, this list will impact the development of quantum computing in China, they added.

China said it "firmly opposes" the latest step taken by the United States and warned it will "take necessary measures to safeguard legitimate rights and interests of Chinese companies."

"We urge the United States to stop abusing national security and politicizing and weaponizing the concept and stop using the groundless list to suppress Chinese companies," Chinese Foreign Ministry spokesman Lin Jian told a press conference in Beijing on Friday.

These additions in the "quantum technology" sector are due to their efforts to acquire or attempt to acquire U.S.-origin materials to support the advancement of China's quantum technology capabilities. Considering the applications of quantum technology, this has serious implications for U.S. national security, the BIS claimed.

In simple terms, if the aforementioned 37 entities wish to purchase foreign dilution refrigerators, advanced chip production capacity, NVIDIA Quantum products, and overseas components, they will need approval from the U.S. Department of Commerce, which is unlikely to be granted in most cases. Therefore, this export restriction will to some extent affect the development of China's quantum computing, aerospace, semiconductor, and other high-tech fields.

In response, on Friday afternoon, a spokesperson for the Chinese Ministry of Commerce responded, stating that China has taken note of it. The U.S. has long overgeneralized the concept of national security and abused export control measures to suppress foreign enterprises, seriously infringing on the legitimate rights and interests of enterprises, disrupting the security and stability of global industrial supply chains, and hindering global economic recovery and development, the spokesperson said, adding that China urges the U.S. to immediately stop its wrong actions and will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.

In October 2022 and October 2023, the BIS issued two export controls on China's advanced semiconductors and computing equipment, attempting to contain China's advanced manufacturing. Several GPU and AI chip products from NVIDIA, AMD, and Intel can no longer be exported to China, and even high-end gaming graphics cards like RTX 4090 are restricted.

On March 2, 2023, the BIS added 28 Chinese entities to the "entity list," including AI company Fourth Paradigm, China's largest server manufacturer, Dawning Group, domestic CPU manufacturer Loongson, and Shenzhen Huawei's subsidiary, HiSilicon. On June 2 last year, the BIS listed 31 Chinese companies and institutions on the "entity list," including Shanghai Supercomputing Technology Co., Ltd., and several aerospace-related companies and institutions.

In April this year, the BIS included 11 entities on the "entity list," including Unisound Cluster, Xian Lico, Sigong Heli, and New Exploits, involving artificial intelligence, computing power, drones, and other fields.

The 37 entities included in the "entity list" this time mainly cover quantum computing, semiconductors, aerospace, and space technology.

The University of Science and Technology of China is a university under the Chinese Academy of Sciences, focusing on frontier science and high-tech, with a combination of medical, management, and humanities disciplines.

The Institute of Physics, the Chinese Academy of Sciences was established in 1958. In addition, the entities listed this time also include the Key Laboratory of Quantum Information of the Chinese Academy of Sciences, the Quantum Information and Quantum Physics Excellence Center of the Chinese Academy of Sciences, and the Shanghai Institute of Microsystems and Information Technology of the Chinese Academy of Sciences.

China Electronics Technology Group Corporation, founded in February 2002, is an important state-owned backbone enterprise. The entities involved this time include CETC 16th, 32nd, 36th, 41st, 45th, and Electronic Equipment Group Co., Ltd.

Quantum Source, established in September 2017, is a leading domestic enterprise in the field of quantum computing.

The Hefei National Laboratory for Quantum Information Science, established in 2017, aims to build a national laboratory for quantum information science.

Zhongke Xingtu Space Technology Co., Ltd. is a wholly-owned subsidiary of Zhongke Xingtu Co., Ltd. (688568, the controlling unit is the Aerospace Information Innovation Research Institute of the Chinese Academy of Sciences). Its main business is to provide digital earth products and technology development services to users such as national defense, government, enterprises, and the public.

CETC Chip Technology Group Co., Ltd., is a subsidiary of China Electronics Technology Group Corporation based on the analog integrated circuit, micro-acoustic devices, and optoelectronic device professionals in the Chongqing area.

Beijing Institute of Quantum Information Science aims to build a world-class new research and development institution. 

The list of the aforementioned 37 entities has been posted on the U.S. Department of Commerce website, and it is expected to be formally implemented on May 15 local time in the United States.

The U.S. entity list for Chinese quantum information technology began in 2021. On November 24 of that year, QuantumCTek and its subsidiary Shanghai QuantumCTek, along with the Hefei National Micro-scale Material Science Center of the University of Science and Technology of China, were included in the "entity list."

In January, Matthew S. Axelrod, Assistant Secretary of Commerce for Export Administration at BIS, revealed that there are nearly 800 Chinese entities on the "entity list" at present, with over 300 added by the Biden administration.

A giant balloon suspected of conducting espionage activities over the United States was discovered in February of last year. This incident escalated tensions between the United States and China, resulting in the sudden postponement of Blinken's scheduled visit to Beijing.

U.S. forces later shot down the balloon, which was the size of about three buses, off the coast of South Carolina, angering China.

That month, the Commerce Department added five companies and one research institute to the entity list for supporting “China’s military modernization efforts, specifically the People’s Liberation Army’s (PLA) aerospace programs including airships and balloons.”

Beijing insisted it was a civilian craft being used for weather research and was accidentally blown off course by strong winds.

Months after the incident, tensions between the two countries gradually eased as senior officials reopened lines of communications. U.S. President Joe Biden and Chinese President Xi Jinping also met in person in November last year near San Francisco and agreed to manage differences.

Despite this, the Biden administration maintains its stance regarding China as the most significant geopolitical threat, as tensions persist between Washington and Beijing on various fronts.