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Biden administration slaps export controls on Chinese firms for aiding PLA weapons development

Military delegates leave the Great Hall of the People after the closing session of the National People's Congress in Beijing on March 11. (Nicolas Asfouri/AFP/Getty Images)

The Biden administration placed seven Chinese firms and government labs under U.S. export controls Thursday for their involvement in China’s effort to build supercomputers that help develop nuclear and other advanced military weapons.

All seven are involved in Beijing’s initiative to build or use supercomputers, including exascale computers, capable of use in development of modern weapons systems, Commerce Department officials said. An exascale computer — the next frontier in high- performance computing — can handle a million trillion calculations per second.

That’s the sort of speed necessary to more accurately model the heat and drag on hypersonic vehicles, a field of advanced weapons research in which the Chinese military is already engaged, using its current generation of supercomputers.

The move makes good on an effort begun under the Trump administration to add the entities to a Commerce Department trade blacklist known as the “Entity List.” The previous administration ran out of time, leaving the package up to its successor to approve.

Read the Commerce Department’s additions to the Entity List

The listing of the firms and labs means they may not use U.S.-origin technology without a Commerce Department license, which is very difficult to obtain.

“These are parties that are acting in ways that are contrary to our national security interests,” said a senior agency official, speaking on the condition of anonymity because of the matter’s sensitivity. “This is really about not having U.S. items contribute to China’s advancement of its military capabilities.”

Speaking broadly Wednesday about Biden administration trade policy toward China, Commerce Secretary Gina Raimondo said, “What we do on offense is more important than what we do on defense.”

The designated entities include three semiconductor firms: Tianjin Phytium Information Technology (or Phytium), Shanghai High-Performance Integrated Circuit Design Center and Sunway Microelectronics.

The trio have links to the People’s Liberation Army. Phytium microprocessors have been used for the supercomputer at China’s largest aerodynamics research complex, which is conducting hypersonics weapons research.

China builds advanced weapons systems using American chip technology

The other four entities are the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi and the National Supercomputing Center Zhengzhou.

“These computers have plenty of legitimate civilian uses, but also are very important for weapons design, particularly advanced weapons design, nuclear weapons, cyber, missiles and even hypersonics,” the official said.

The Commerce Department began sanctioning entities linked to Chinese military high-performance computing in 2015 under the Obama administration. That year, for example, it placed the National University of Defense Technology and the National Supercomputing Center in Tianjin — both PLA institutions — on the Entity List. Both are closely linked to Phytium, which on Wednesday officially renamed itself Feiteng Information Technology Co., Ltd.

Phytium uses American software design companies, which will now have to obtain a license to continue to do business with the Chinese chipmaker.

National security experts applauded the administration’s action as long overdue. But they warned that China has ways around export controls.

“To be truly effective, to be more than show,” said Tim Morrison, a Trump administration aide who coordinated export control policy, the Biden administration must apply a more stringent measure — known as the foreign direct product rule — that bars all U.S. technology to sanctioned entities even if that technology is coming from a foreign company.

That would include Taiwanese chip foundries that use American precision tools.

“Otherwise, China will keep getting this technology and will assume the Biden administration isn’t truly serious about the ‘extreme competition’ it has promised,” Morrison said.

A decade ago, before the blacklisting, the Tianjin supercomputing lab used chips from Silicon Valley-based Intel in its supercomputer, the Tianhe 1. After the lab was placed under U.S. sanctions, the California chip giant could no longer provide it technology, so the lab turned to Phytium, according to Western analysts.

In 2019, the Commerce Department listed a second set of Chinese companies and labs for involvement with the military’s effort to develop an exascale supercomputer.

Because many advanced chips can be used for commercial as well as military purposes, they are perfectly suited to the Chinese Communist Party’s strategy of “military-civil” fusion, which uses civilian firms to produce or acquire goods and technologies for the PLA.

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Shanghai High Performance and some of the sanctioned supercomputing centers support the PLA’s 56th Research Institute, which handles code breaking for communications intercepts, said a second senior Commerce Department official.

“All of this is a way to say that these companies have national standards for supporting the military,” the Commerce official said.

The official said the Commerce Department seeks to make its export controls more effective by conferring with allies to see what actions they might take “because many of them have similar concerns” about China. Taiwan, for instance, is a key player in the global semiconductor supply chain, and the world’s most advanced chip foundry is located there.

On Wednesday, before the Commerce announcement, Taiwanese Foreign Minister Joseph Wu said that Taipei would work with the United States to monitor its chip suppliers.

Taipei wants to “make sure that Taiwan’s semiconductor supply to China is in line with the U.S.’s broader strategic objectives,” he said. “The Taiwanese government has been working very closely with the United States on the kinds of norms that we need to follow to make sure the supply chain is beneficial not just to Taiwan but the broader international community, especially like-minded countries.”

To compete in the long run with China, Raimondo said Wednesday, “we have to work with our allies and find common ground where we can.”

Gerry Shih in Taipei, Taiwan, contributed to this report.