US alerted China about its updated export restrictions

NEW YORK/WASHINGTON: According to a US official, the Biden administration issued a warning to Beijing about its plans to amend regulations that limit the export of AI chips and chip-making equipment to China as early as October. This was done in an effort to normalize ties between the two giants.

The Commerce Department, which is in charge of export controls, is updating the export limitations that were first announced last year. According to other sources, the update aims to close some gaps in the export limits on artificial intelligence (AI) chips and restrict access to more chipmaking equipment in accordance with recent Dutch and Japanese regulations.

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Based on interactions with administration representatives. The PRC has anticipating an update around the one-year mark, the U.S. official said, abbreviating for the People’s Republic of China. The first rules were released on October 7, 2022.

Reuters is reporting for the first time that U.S. officials told their Chinese counterparts about the material in recent weeks, according to the official. The representative declined to provide any information about the specific conversations.

As part of a larger effort by the Biden administration to normalize relations with Beijing. The government is giving China a heads-up about the rules. The approach comes after the U.S. decision to shoot down a Chinese surveillance balloon in February drastically increased tensions.

High-ranking representatives from the Biden administration have also visited China, notably Gina Raimondo, the secretary of commerce, in August. Additionally, in September, National Security Advisor Jake Sullivan spoke with Wang Yi, China’s foreign minister.

By denying China access to cutting-edge AI chips and restricting its ability to import the most advanced chipmaking equipment from the United States. The limitations announced in October 2018 sought to prohibit the use of U.S. technology to bolster the Chinese military.

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The Department of Commerce declined to respond. And when questioned about the warning, a spokeswoman for the Chinese embassy in Washington stated that she had “nothing to offer.”

“China firmly opposes the U.S.’s overstretching of the national security concept. And abuse of export control measures to wantonly hobble Chinese enterprises,” said spokesperson Liu Pengyu.

Former White House official Peter Harrell stressed that he did not know if the administration had warned China about the new rules. But said, if they did, it would represent “a bit of an inflection point”. For the administration as it tries to avoid sending misunderstood signals.

Treasury Secretary Janet Yellen also gave Chinese officials a warning in July about restrictions on U.S. investment in China released in August.

The Biden administration is hoping to clinch Chinese President Xi Jinping’s attendance at the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco in November, too, an effort which also has weighed on the timing of the upcoming export rules’ release.

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Officials have sought to avoid publishing them in the immediate lead-up to the summit, which they saw as potentially jeopardizing Xi’s attendance, sources said. Any rules not ready for publication by early October would likely be held until after the summit to avoid antagonizing China, they noted.

“The Administration narrowed in on or near the one-year anniversary for a number of reasons – including to establish a clear cadence,” the official said.

But, the official added, the technical work needed to finalize the restrictions was not yet complete. “As of this moment, final plans are not in place,” the official said on Friday.

Biden and Xi have not met in person since a G20 summit on Indonesia’s resort island of Bali in November last year after Xi shunned the G20 meeting in India last month.

The United States, the Netherlands and Japan Which together control the world’s top chipmaking equipment, agreed to coordinate efforts earlier this year.

The upcoming U.S. rules could hit ASML, the world’s leading chip equipment maker and Netherlands’ largest company. Because its systems contain U.S. parts and components, as Reuters exclusively reported in June.

A spokeswoman for ASML declined to comment.

It is not unusual for the U.S. to modify proposals before clearing regulations, so the restrictions, like the timing, could change.