U.S. officials moved Friday to cut off Chinese tech giant Huawei from global chipmakers, ramping up sanctions on the company seen by Washington as a national security risk.
The move is part of a ramping-up of attacks on China, with Donald Trump and his administration accusing it of being culpable for the spread of coronavirus.
Hostility to China is set to be a central theme in his re-election campaign.
The Commerce Department said it was broadening its sanctions enforcement to include semiconductor designs that are developed using US software and technology.
Officials said Huawei had been circumventing sanctions by obtaining chips and components that are produced around the world based on US technology.
‘This announcement cuts off Huawei’s efforts to undermine US export controls,’ the Commerce Department said in a statement.
‘This action puts America first, American companies first, and American national security first,’ a senior Commerce Department official told reporters in a telephone briefing on Friday.
The U.S. government will have to wait and see if China retaliates, senior U.S. officials said in a call with reporters.
‘America first.’ Donald Trump’s move on Huawei was described as being in line with his election pitch of hostility to China and encouraging domestic manufacturing
Huawei, the world’s top telecoms equipment maker, did not respond to a request for comment.
Bit in contrast, China said it is ready to put U.S. companies in an ‘unreliable entity list,’ as part of countermeasures against Washington’s move, the Global Times reported on Friday.
The measures include launching investigations and imposing restrictions on U.S. companies such as Apple, Cisco Systems and Qualcomm as well as suspending purchase of Boeing airplanes, the report said, citing a source.
The Global Times is published by the People’s Daily, the official newspaper of China’s ruling Communist Party. While the Global Times is not an official mouthpiece of the party, its views are believed to reflect those of its leaders.
The Commerce Department said it would ‘narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain US software and technology.’
Commerce Secretary Wilbur Ross said in a statement that even as Huawei seeks to develop its own components in response to US sanctions, ‘that effort is still dependent on US technologies.’
The move is the latest aimed at Huawei, one of the world’s biggest tech and smartphone firms, which US officials say has been stealing American trade secrets and aiding Beijing’s espionage efforts.
Huawei has denied links to the Chinese government, and the sanctions have heightened US-China trade tensions.
The latest action ‘puts America first, American companies first and American national security first,’ a senior Commerce Department official said in a statement.
US officials said the new rules would have a 120-day grace period. After that, any chips destined for Huawei or its affiliates would be required to have a license.
A senior State Department official, who joined a call with journalists on the new actions, said the move would not necessarily deny Huawei access to these products but require a license allowing Washington to keep track of the technology.
‘One shouldn’t jump to conclusions on what the impact will be,’ the official said.
Retaliation? Chinese president Xi Jinping’s government could move against Apple and other U.S. tech firms over the Huawei sanctions and stop buying Boeing planes
The Commerce Department’s rule also hits Taiwan Semiconductor Manufacturing Co Ltd, the biggest contract chipmaker and key Huawei supplier, which announced plans to build a U.S.-based plant on Thursday.
TSMC said on Friday it is ‘following the U.S. export rule change closely’ and working with outside counsel to ‘conduct legal analysis and ensure a comprehensive examination and interpretation of these rules.’
The department said the rule is aimed at preventing Huawei from continuing to ‘undermine’ its status as a blacklisted company, meaning suppliers of U.S.-made sophisticated technology must seek a U.S. government license before selling to it.
‘There has been a very highly technical loophole through which Huawei has been in able, in effect, to use U.S. technology with foreign fab producers,’ Commerce Secretary Wilbur Ross told Fox Business News on Friday, calling the rule change a ‘highly tailored thing to try to correct that loophole.’
The company was added to the so-called ‘entity list’ last year due to national security concerns, amid accusations from Washington that it violated U.S. sanctions on Iran and can spy on customers. Huawei has denied the allegations.
Frustration among China hawks in the administration that Huawei’s entity listing was not doing enough to curb its access to supplies prompted an effort, first reported by Reuters in November, to crack down on the company that culminated in Friday’s rule.
Despite the crackdown, the Commerce Department separately extended a temporary license that was set to expire on Friday to allow U.S. companies, many of which operate wireless networks in rural America, to continue doing business with Huawei through Aug. 13. It warned it expected this would be the final extension.
Huawei, which needs semiconductors for its smartphones and telecoms equipment, has found itself at the heart of a battle for global technological dominance between the United States and China, whose relationship has soured in recent months over the origins of the deadly coronavirus.
While the rule change is aimed at squeezing Huawei and will hit the chip foundries it relies on, U.S. manufacturers of chipmaking equipment could face long-term pain, if chipmakers seek out new equipment sources beyond the reach of U.S. rules.
But for now, most chipmakers rely on equipment produced by U.S. companies like KLA, Lam Research and Applied Materials , according to a report last year from China’s Everbright Securities.
China could interfere with the US election in retaliation for blaming the coronavirus pandemic on Beijing, state media reveals
China is planning ‘necessary’ retaliation measures to punish the American politicians who vow to hold Beijing responsible for the coronavirus outbreak, according to Chinese state media.
Beijing’s sources stressed that the sanctions to be announced by the Communist Party ‘ will impact’ the upcoming US presidential election in November.
The punitive penalties will also be given to Missouri and ‘other US individuals and entities’ that have sued China over its perceived mishandling of the health crisis, reported the Global Times citing insiders.
The news came after US President Donald Trump billed COVID-19 as ‘the Plague from China’ in a tweet that’s bound to draw ire from Beijing.
The Chinese Ministry of Foreign Affairs declined to comment on Beijing’s reported reprisal plan against Washington.
The pandemic has claimed more than 300,000 lives and infected over 4.4 million worldwide after first emerging in the Chinese city of Wuhan in December.
The United States has been the country worst-hit by the coronavirus, with a death toll of more than 86,000.
Missouri filed a lawsuit against China last month, accusing it of ‘lying to the world about the danger and contagious nature of COVID-19’. Mississippi said a day later it was also preparing to sue Beijing for similar reasons.
Sources told the Global Times that China ‘is extremely dissatisfied’ about those lawsuits.
Beijing’s officials allegedly deem these cases as ‘vexatious litigation’, a legal term that means the proceedings started with malice and without a good cause.
People in-the-know told the state-run outlet that China ‘won’t just strike back symbolically, but will impose countermeasures that will make them feel the pain’.
The sources did not reveal what retaliation China was planning but hinted that the measures could interfere with the upcoming American election.
The Global Times wrote: ‘Republicans who have been groundlessly accusing China and inflaming the “holding China accountable” political farce will face severe consequences, sources said, noting that the aftermath will also impact the upcoming November elections, while business and trade between Missouri and China will be further soured.’
The reference to the election only appeared in the English version of the column, not the original Chinese version, suggesting that it is a message Beijing wants the West to hear, but not their own people.
The US state of Missouri filed a lawsuit against China last month, accusing it of ‘lying to the world about the danger and contagious nature of COVID-19’. Pictured, people wearing protective masks walk past shops closed due to the virus in Brentwood, Missouri, on May 7
Zhao Lijian (pictured on April 8), a spokesperson from the Chinese Ministry of Foreign Affairs, said he did not have comments on the reported retaliatory plan after being asked about it
Zhao Lijian, a spokesperson from the Chinese Ministry of Foreign Affairs, said he did not have comments on the reported retaliatory plan after being asked about it at a press briefing today.
But the official blasted ‘some American people’ for trying to hold China accountable for the pandemic.
He claimed that those people were laying their faults at other people’s door and shirking their responsibilities.
Zhao did not name specific names.
He added: ‘The Chinese side urges the US to stop its slander and smearing against China, stop reviewing and pushing forward relevant anti-China motions, curb the vexatious litigation behaviour targeting China, and spend its energy on tackling the epidemic and safeguarding the life safety of American people.
‘Such blame games from the US side are too dull and laughable. Please stop.’
Political tensions between China and the US have erupted in the past few months as the two nations condemn each other’s handling of the coronavirus outbreak.
The US accuses China of covering up the initial epidemic, hiding the virus’s origin and taking advantage of the crisis to push its territorial ambitions.
China accuses the US of carrying out ‘smear campaigns’ and avoiding its responsibilities in containing the disease. Zhao, the spokesperson of China’s foreign ministry, has suggested that the virus was planted in Wuhan by the US troops.
The US state of Missouri last month claimed that China’s officials were to blame for the devastating crisis that is sweeping the world.
The legal challenges ramp up the pressure on President Xi to account fully for his country’s actions. The Chinese leader is pictured during a visit to the province of Shaanxi on April 20
The lawsuit, filed in the US District Court for Eastern Missouri on April 21, alleged that Chinese officials were ‘responsible for the enormous death, suffering, and economic losses they inflicted on the world, including Missourians’.
‘The Chinese government lied to the world about the danger and contagious nature of COVID-19, silenced whistleblowers, and did little to stop the spread of the disease,’ Republican Attorney General Eric Schmitt’s office said in a written statement.
‘They must be held accountable for their actions.’