Tight export control enforcement is as necessary as ever. That’s the takeaway from a blockbuster Wall Street Journal story on January 29, which brings China’s strategy of using American technologies to arm its military – and circumvent U.S. export controls in the process – into sharp focus.
The Journal reports that “the state-run China Academy of Engineering Physics (CAEP) has managed to obtain the semiconductors made by U.S. companies such as Intel Corp. and Nvidia Corp. since 2020 despite its placement on a U.S. export blacklist in 1997.” The Journal further reports that CAEP – the top research arm of China’s nuclear weapons program – acquired the chips through resellers, which may have used or marketed them as chips for data centers or personal computers. This instance could very well be a display of China’s military-civil fusion strategy in action – the Chinese military can easily command the acquisition of technologies restricted to civilian purposes, even banned ones.
This episode highlights the enforcement challenges facing the Commerce Department, which said, “As mass-market products move through multiple parties in global supply chains, full visibility on ultimate end users is a large undertaking.”
This story should heap fuel on the fire for Commerce to enforce the major round of export controls issued last October. Helpfully, Thea Rozman Kendler, Assistant Secretary of Commerce for Export Administration within BIS, stated last week, “Russia and China will continue to be at the forefront of BIS policy actions, frankly for years to come.” Kendler also added, “You can also expect that we will continue to keenly focus on strengthening our relationships with partners and allies.”
That work is already underway, as the Financial Times reports that Japan and Netherlands have decided to curb chip exports following a meeting of high-level representatives at the White House on January 27. Taking U.S leadership with unilateral action to a multilateral level is an important step for making sure that the controls remain potent. They’ve already been so effective that Malaysia’s The Star reports that Chinese chipmaker YMTC – a major focus of the October regulations – “may even postpone construction of its second wafer fab in Wuhan due to disruptions to its procurement supply chain.”
Bringing Japan and the Netherlands on board will be a force multiplier toward making sure that the free world’s top adversary – the Chinese Communist Party (CCP) – cannot weaponize technologies against America and its allies. But even as national security analysts can celebrate this important multilateral development, it’s clear from the Journal story that the Commerce Department still has much work to do to ensure that American chips – and, now, the American tools for making them – do not wind up in the hands of the Chinese military.