While the U.S.-China trade frictions have not stopped or eased, there are signs that subtle changes are shown in the “key battlefields”, that is from the punitive tariffs on commodity trade shifting to export restrictions in specific areas of technology. Global trade frictions have never been a single “battle”, of a single means, but a comprehensive “warfare” involving multiple fields and a variety of sanctions. The latest indications are that systematic technical trade restrictions in the field of science and technology are becoming a new chapter in U.S.-China trade frictions.
On November 19 (U.S. time), the U.S. Department of Commerce's Bureau of Industry and Security (BIS) issued an advance notice on technology export control, seeking public comments on regulating 14 categories of technology exports that in volve in national security and frontier technology. This outside world regards this notice as the most stringent technology export control regulation in the history of the United States. The 14 technical categories that the US government intends to implement export controls are: (1) Biotechnology: nanobiology, genetic engineering, etc. (2) Artificial intelligence (AI) and machine learning technology: deep learning, voice and audio processing, AI cloud technology, etc. (3) Position, navigation and timing (PNT) technology. (4) Microprocessor technology: System-on-Chip (SoC) and Stacked Memory on the chip. (5) Advanced computing technology: Memory-centric logic. (6) Data analysis technology: visualization, automated analysis algorithms, context-aware computing. (7) Quantum information and sensing technology: quantum computing, quantum encryption, and quantum sensing. (8) Logistics technology: mobile electric power, modeling and simulation systems, distribution-based logistics systems (DBLS), etc. (9) Additive manufacturing: 3D printing, etc. (10) Robotics: micro-drones and micro-robotic systems, swarming technology, self-assembling robots, molecular robotics, robotic compilers, and smart dust. (11) Brain-computer interfaces: neural-controlled interfaces, mind-machine interfaces, direct neural interfaces, and brain-machine interfaces. (12) Hypersonics: flight control algorithms, propulsion technologies, thermal protection systems, specialized materials (for structures, sensors, etc.). (13) Advanced materials: adaptive camouflage, functional textiles (such as advanced fiber and fabric technology), and biomaterials. (14) Advanced surveillance technologies: faceprint and voiceprint technologies.
It is worth noting that although this notice from the U.S. government does not directly mention China, considering China's huge trade scale and the complementary trade structure between China and the United States, China is expected to be the country most affected by this. Deutsche Bank analysts Zhang Zhiwei and Xiong Yi said in a notice that in the US technology export restriction list, "many technologies and products are used for both military and civil purposes. In a cold economic war, even if the controls are not imposed on certain products at the current stage, companies will likely feel the potential risk if the tension escalates between China and the U.S. down the road." Some analysts believe that many of the chips that Chinese high-tech companies rely on will face a new U.S. blockade. China International Capital Corporation (CICC) issued a report stating that the U.S. intends to tighten technology export controls, which will affect Chinese companies that purchase U.S. parts and components. If the technology is finally banned from being exported, it will affect the development of China's high-tech industry. The report pointed out that the technical blockade has a higher potential loss than the tariff, and it will cause damage to both the technology owner and the user. Although it is only in the public consultation stage, once the measures are implemented, the impact cannot be ignored, though the specific impact can only be assessed until the official bill is announced.
The U.S. export restriction list is a double-edged sword that not only hits technology users as a consumer market but also strikes exporters of technology products. Due to the wide exchange of the current technology investment in the United States and China, as well as other countries in the world, the wide range of technologies covered by the list of this new control measures will hit many ongoing and potential R&D projects in Silicon Valley in the U.S., and may also affect the companies there. According to an analysis published in the Washington Post, technology export control will hit a number of U.S. technology companies; it is expected that the technology export to China by Apple, Google, Amazon and other companies in the field of voice smartphones, automated vehicles, and supercomputers will be restricted. For example, Apple's products and services would be included in the list of artificial intelligence and natural language processing technology; this includes Siri, FaceID, etc. The new restriction prohibits Apple from exporting products to individual countries, and it might even need to cut off some product features.
Anbound’s researchers believe that if U.S.-China trade frictions shift to a targeted technical blockade, it may have specified impact on China. This will not only directly inhibit the development of China's high-tech enterprises, but also drag down the pace of China's overall scientific and technological progress. Relevant data show that many high-tech products in China must be imported from the United States or other countries. In particular, more than 80% of high-end chips rely on imports from abroad, especially from the United States. More than 80% of the engine industry, including automobile engines, ship engines, and aircraft engines, rely on foreign countries; more than 80% of China's high-end computer numerical control (CNC) machine tools need to be imported from abroad; China's fiber-optic equipment is said to be 100% imported; in addition, many of the Chinese university laboratories, especially many national key laboratories, must import much important equipment from abroad; high-end medical equipment is basically imported from abroad; in the robotic industry, most of the key components are also imported from abroad. Even high-speed rail that China is the pride of, has the control systems, safety systems, and other software, as well the axles and other key components imported from abroad. Objectively, in many fields of technological innovation, Chinese technology has its source in the United States. The ZTE incident might be an isolated case, yet if the United States imposes restrictions in the field of science and technology, China will undoubtedly be hampered, and more ZTE-like incidents could happen.
In today's economic globalization, the technology industry in China and the United States are inter-related. The U.S. technology companies are investing heavily in China, while more and more Chinese companies are becoming sources of financing for high-tech start-ups such as the Silicon Valley’s artificial intelligence. Under globalization, the high-tech industry sees a more complex high-tech industry chain that is harder to be replaced. If the U.S. government resolutely introduces technology export controls, it will form a strong intervention in the industrial chain and supply chain in the high-tech sector. Compared with the general industry, once the high-tech industrial chain is destroyed, reconstruction will be more difficult. In addition, as an industry leading innovation, the sustainable development of the high-tech industry can promote the social division of labor to a higher level and create more market space. Once this process is destroyed, it is likely to cause world economic growth to stagnate or even decline.
Final analysis conclusion:
The enlargement of the U.S. technology export restrictions is a signal that the focus of the U.S.-China trade frictions has shifted from large-scale trade to technology, which will hit the global high-tech industry ecology. This will especially specified impact China, which is a "world factory" eager to acquire technology to achieve economic transformation. For such new changes in the U.S.-China trade, the Chinese decision-making departments need to maintain close dynamic tracking research.
