WASHINGTON — The Biden administration announced Monday broader restrictions on advanced technology that can be sent to China, in an effort to prevent the country from developing its own advanced chips for military equipment and artificial intelligence.
The restrictions prohibit the sale of certain types of chips and machinery to China and add more than 100 Chinese companies to a restricted trade list. The move marks the Biden administration’s third major update over the past three years to a set of rules that have tried to cut China off from the world’s most advanced technology.
The rules are also likely to be the administration’s last on Chinese technology before President-elect Donald Trump’s inauguration next month, and they aim to cement the Biden administration’s legacy in slowing down a rival country’s technological progress.
Commerce Secretary Gina Raimondo told reporters in a call Sunday that the move represented “the strongest controls ever enacted by the U.S. to degrade the PRC’s ability to make the most advanced chips that they’re using in their military modernization,” referring to the People’s Republic of China. She said the government had worked closely with experts, industry and allied countries to ensure that “our actions protect national security while minimizing unintended commercial consequences.”
National security officials have said China’s ability to acquire and make advanced computer chips poses a threat to the United States. The chips are crucial for powering AI and supercomputers that can be used to launch cyberattacks, design new weapons, create surveillance systems and increase the military’s ability to respond accurately and rapidly to foreign attacks.
The rules advance measures the Biden administration issued in October 2022, and again in October 2023. They have been the subject of fierce lobbying by both national security hawks eager to crack down on China and the chip industry, which has argued that controls that are too tight risk hurting U.S. tech leadership.
Both camps ultimately left their mark on the restrictions issued Monday. The rules add 140 Chinese companies, many of which make the tools and machinery necessary for manufacturing chips, to a restricted trade list called the entity list — one of the largest batches of additions so far.
The rules also bar shipments to China of certain advanced memory chips, and establish global restrictions on shipments of roughly two dozen types of equipment used to manufacture chips, effective Dec. 31. They also contain new guidance for U.S. companies to carry out due diligence on the Chinese factories they sell to.
But some officials and analysts have said the regulations were shaped by industry lobbying, and have pointed out certain exceptions that may be favorable to U.S. exporters. For example, the rules set up a new and complicated licensing policy that will allow officials to grant companies special permission to sell to some Chinese factories linked with Huawei, a Chinese tech company under sanctions.
Critics also say the administration could have gone more aggressively after major Chinese chipmakers that are linked to the country’s technology development efforts. The rules also target established Chinese factories that have been operational and fully outfitted with machinery for years, but they do not include many Chinese facilities that are now under construction that could soon be buying large volumes of machinery, analysts said.
The stocks of semiconductor equipment-makers, including Applied Materials, KLA and Lam Research, rose Monday as investors digested the impact of the rules.
The regulations stretch more than 200 pages and were described by some analysts as “absurdly complicated.” Gregory C. Allen, a technology analyst at the Center for International and Strategic Studies, said the complexity reflected the intense negotiations that had gone into the rules.
“The longer the rule is, the more different actors were having a whack at it,” Allen said.
Some of the biggest actors, analysts and officials say, were the companies that make machinery used to manufacture semiconductors. These companies have argued to government officials that controls that apply solely to U.S. firms and not international competitors will hurt U.S. tech leadership, without effectively restraining China’s ambitions.
Shipments of chipmaking equipment to China from firms such as ASML in the Netherlands and Tokyo Electron in Japan have surged in recent years, as those companies have stepped in to provide China with the technology U.S. companies cannot.
U.S. officials spent many months negotiating with the Japanese and Dutch governments to encourage them to issue their own restrictions on the industry. The governments ultimately reached an agreement in principle in September, people familiar with the negotiations said, though neither Japan nor the Netherlands has publicly announced the deal.
Supporters maintain that bringing in other countries ultimately makes the action stronger, but critics say it has a cost: In the many months that the United States worked to get allies onboard, Chinese factories have been able to buy billions of dollars of technology. It remains unclear when Japan and the Netherlands will put their own rules into effect.
Allen said some parts of the new rules were “a really remarkable expansion of authority” for the United States. For example, the restrictions contain global provisions that will prevent companies in foreign countries from shipping certain machinery to China, if they include computer chips that were made using American machinery or technology.
Those global rules exempt certain countries that officials say have the capability to impose their own comparable rules, essentially creating a pathway for allies like Japan and the Netherlands to impose their own controls.
The rules were designed in part to address incidents in which U.S. companies had used offshore facilities to skirt bans on exporting directly from the United States, officials said. A report published in November by Allen showed that, in recent years, U.S. semiconductor equipment companies had made an increasing volume of their equipment sales to China from facilities outside the United States.
But Allen said that, though this authority was powerful, it contained many exceptions. “You look at how they actually used this authority, and there are all these carve-outs, mechanisms by which this stuff can be shipped” to China, Allen added.
It is still unclear how the Chinese government will respond to the measures. In recent years, China has expanded its own export-control laws, giving it more ability to halt exports of products like rare earth minerals, and has created an “unreliable entity list” to penalize companies that undermine national interests.
In a news conference Monday, Lin Jian, a spokesperson for the Chinese Foreign Ministry, said China had always firmly opposed what he called the “abuse of export-control measures and malicious blockade and suppression of China.”
“China will take resolute measures to firmly safeguard the legitimate rights and interests of Chinese companies,” he said.
Paul Triolo, an analyst at the consultancy Albright Stonebridge Group, said Beijing’s response would take time to unfold but would “almost certainly include targeted actions against U.S. technology companies in China.” Last year, China had launched a cybersecurity investigation against U.S. chipmaker Micron, he pointed out, after the United States put a major Chinese memory-chip maker on the entity list.
China’s efforts to develop its own independent technology supply chains, along with the export controls the United States has issued in recent years, are increasingly splitting the world into two spheres when it comes to advanced technologies.
Global companies have been struggling to straddle that divide. For many companies, China remains an essential economic partner, as home to most of the world’s electronics factories and as a huge consumer market in its own right.
But China is also now increasingly recognized as the United States’ biggest rival, the only other government with the ability and intent to challenge the U.S. on the world stage. China has unabashedly deployed foreign technology and leaned on private companies to strengthen the military, a situation U.S. officials now see as untenable.
This article originally appeared in The New York Times.