Billions Worth of American Tech Licenses Approved for Blacklisted Chinese Companies

Suppliers to two blacklisted Chinese companies—telecom giant Huawei and China’s top chipmaker SMIC—were approved to receive billions of dollars worth of licenses for U.S. technologies shipments between November and April, documents released by the House Committee on Foreign Affairs on Oct. 21 detail. Some 301 licenses worth a total of $103 billion were approved for suppliers to sell goods to Huawei and SMIC, according to the documents prepared by the Commerce Department. Huawei and Semiconductor Manufacturing International Corp (SMIC) were put on a U.S. trade blacklist, known as the “entity list,” in May 2019 and December 2020 respectively over national security concerns. Their addition means that American companies seeking to sell to them must apply for a license with the department. Huawei equipment was also previously banned from use by the federal government over security concerns. SMIC is the largest manufacturer of semiconductor chips in mainland China and is known to have ties to the Chinese military. The committee voted Thursday to release the data, which it received in May. Rep. Michael McCaul (R-Texas), the ranking member of the House Committee on Foreign Affairs, issued a prepared statement saying that the bipartisan effort to release the documents indicated the seriousness of the matter. “In addition to sanctions and other tools to impose consequences on bad actors, export controls are fundamental in restricting the transfer of technology and goods to our adversaries,” McCaul said. McCaul said that such licenses, if materialized into actual shipments, could end up being used by the Chinese military, and suggested that American technologies could be responsible for China’s reported test of a nuclear-capable hypersonic weapon. “This decision by the House Foreign Affairs Committee reflects our bipartisan support for conducting oversight over our export control system,” McCaul said. “This data provides concrete statistics to a public policy issue that, until now, has been based solely on rhetoric and anecdotes.” “The recent reports regarding China’s hypersonic program, that has likely been supported by U.S. technology, is another frightening wake-up call for why there must be more transparency and stricter enforcement when it comes to export controls.” Statements by the Commerce Department in the documents indicated that the license applications involving Huawei and SMIC were processed under licensing policies developed by the Trump Administration and maintained by the Biden Administration. Further, the department wrote that the aggregate numbers of licenses noted in the documents do not necessarily reflect the real number of licenses that were utilized for exports to the two companies. This is because the documents do not include those licenses that were earmarked for denial but had not yet been denied, as well as the fact that approved licenses do not correspond directly to actual shipments made. The Commerce Department stated that, generally, about half of such licenses are utilized, and warned that the release of the data to the public would not improve efforts to understand the effectiveness of U.S.-China trade policy. “The public release of aggregate licensing data for certain PRC [People’s Republic of China] companies on the Entity List, over an arbitrary snapshot in time, risks politicizing the licensing process and misrepresenting the national security determinations made by the Departments of Commerce, Defense, Energy, and State,” the statement said. A majority of the licenses granted did not authorize shipments of sensitive items. Of the 113 licenses approved for Huawei during the period, 80 were for non-sensitive items that only required a license because the recipient was blacklisted. For SMIC, the figure was 121 of 188. Licenses are generally good for four years. Huawei and SCIM did not respond to a request for comment by the time of publication. Reuters contributed to this report. Andrew ThornebrookeReporter Follow Andrew Thornebrooke is a freelance reporter covering China-related issues with a focus on defense and security. He holds a MA in military history from Norwich University and authors the newsletter Quixote Hyperdrive.

Billions Worth of American Tech Licenses Approved for Blacklisted Chinese Companies

Suppliers to two blacklisted Chinese companies—telecom giant Huawei and China’s top chipmaker SMIC—were approved to receive billions of dollars worth of licenses for U.S. technologies shipments between November and April, documents released by the House Committee on Foreign Affairs on Oct. 21 detail.

Some 301 licenses worth a total of $103 billion were approved for suppliers to sell goods to Huawei and SMIC, according to the documents prepared by the Commerce Department.

Huawei and Semiconductor Manufacturing International Corp (SMIC) were put on a U.S. trade blacklist, known as the “entity list,” in May 2019 and December 2020 respectively over national security concerns. Their addition means that American companies seeking to sell to them must apply for a license with the department.

Huawei equipment was also previously banned from use by the federal government over security concerns. SMIC is the largest manufacturer of semiconductor chips in mainland China and is known to have ties to the Chinese military.

The committee voted Thursday to release the data, which it received in May.

Rep. Michael McCaul (R-Texas), the ranking member of the House Committee on Foreign Affairs, issued a prepared statement saying that the bipartisan effort to release the documents indicated the seriousness of the matter.

“In addition to sanctions and other tools to impose consequences on bad actors, export controls are fundamental in restricting the transfer of technology and goods to our adversaries,” McCaul said.

McCaul said that such licenses, if materialized into actual shipments, could end up being used by the Chinese military, and suggested that American technologies could be responsible for China’s reported test of a nuclear-capable hypersonic weapon.

“This decision by the House Foreign Affairs Committee reflects our bipartisan support for conducting oversight over our export control system,” McCaul said. “This data provides concrete statistics to a public policy issue that, until now, has been based solely on rhetoric and anecdotes.”

“The recent reports regarding China’s hypersonic program, that has likely been supported by U.S. technology, is another frightening wake-up call for why there must be more transparency and stricter enforcement when it comes to export controls.”

Statements by the Commerce Department in the documents indicated that the license applications involving Huawei and SMIC were processed under licensing policies developed by the Trump Administration and maintained by the Biden Administration.

Further, the department wrote that the aggregate numbers of licenses noted in the documents do not necessarily reflect the real number of licenses that were utilized for exports to the two companies.

This is because the documents do not include those licenses that were earmarked for denial but had not yet been denied, as well as the fact that approved licenses do not correspond directly to actual shipments made.

The Commerce Department stated that, generally, about half of such licenses are utilized, and warned that the release of the data to the public would not improve efforts to understand the effectiveness of U.S.-China trade policy.

“The public release of aggregate licensing data for certain PRC [People’s Republic of China] companies on the Entity List, over an arbitrary snapshot in time, risks politicizing the licensing process and misrepresenting the national security determinations made by the Departments of Commerce, Defense, Energy, and State,” the statement said.

A majority of the licenses granted did not authorize shipments of sensitive items. Of the 113 licenses approved for Huawei during the period, 80 were for non-sensitive items that only required a license because the recipient was blacklisted. For SMIC, the figure was 121 of 188.

Licenses are generally good for four years.

Huawei and SCIM did not respond to a request for comment by the time of publication.

Reuters contributed to this report.


Andrew Thornebrooke

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Andrew Thornebrooke is a freelance reporter covering China-related issues with a focus on defense and security. He holds a MA in military history from Norwich University and authors the newsletter Quixote Hyperdrive.