U.S.Tech Restrictions on China Can Be Counterproductive

The U.S. Government has constantly tightened its technological restrictions on China over the past few months， despite widespread concern that such moves would disrupt the global supply chain.

While these sanctions may bring some diffi -culties to Chinas hi-tech development， they will also cost U.S. tech companies heavily as they will risk losing the Chinese market， which has the potential to be the worlds biggest one.

On June 30， the U.S. Federal Communications Commission designated Huawei and ZTE， both Chinas leading telecommunications enterprises， as national security threats and banned rural carriers from buying equipment and services from them with government funds.

On May 15， the U.S. Department of Commerce （DOC） amended the so-called Direct Product Rule to restrict sales of any products using even a minimal portion of U.S.-origin technologies to Huawei and its affiliates. One year earlier， the DOC included Huawei in a blacklist of entities， requiring U.S. fi rms to get ratifi cation from the government before selling products to the company.

Now the United States has gone even further to impose visa restrictions on Chinese students and visiting scholars， and launched tougher investigation into Chinese-American scientists working in the hi-tech sector.

The United States has also pressed or even threatened other countries to stop cooperating with Huawei on 5G， trying to build a global blockade to choke the global leader in 5G technologies and impede Chinas hi-tech development.

In doing so， the U.S. side often cites “national security threats” from Chinese products， which is unfounded and biased， as there has never been credible evidence for such claims. On the contrary， there are plenty of cases where the United States uses its tech advantages to spy on the world， including leaders of its allies.

The U.S. tech restrictions target any foreign fi rms who pose challenges to the countrys tech advantages， and their tactics could be extremely unscrupulous when necessary.

The French conglomerate Alstom became a victim in 2013， when it was charged with bribery， fi ned heavily by the U.S. Department of Justice， and forced to restructure with the most important part of its business being acquired by an American company， just because it was poised to challenge Americas leading position in its business areas.

There is no doubt that the U.S. tech restrictions will severely impact the normal operations of Huawei and other Chinese companies， as well as disrupt the global supply chain. An abrupt ban on supplies will also cost U.S. hi-tech enterprises substantially.

It should be noted that no enterprise in the supply chain is impervious to the restrictions， including American fi rms. A recent report by Boston Consulting Group found that if the United States fully bans semiconductor exports to China， U.S. semiconductor companies could lose 18 percent of the global share and 37 percent of their revenues in three to fi ve years.

Even if the United States only maintains the restrictions already in force， U.S. companies could lose 8 percent of the global share and 16 percent of their revenues， according to the report.

The DOCs latest ban on Huawei has been widely questioned by American industry groups， warning that the ban will seriously harm American chip making industry.

Doug Jacobson， an international trade lawyer， was quoted by media as saying that the move would “have a far more negative impact on U.S. companies than it will on Huawei， because Huawei will develop their own supply chain，” and will eventually fi nd alternatives.

China firmly opposes U.S. irrational crackdown on Chinese enterprises， and tries to seek solutions in the spirit of international cooperation and distribution.

Andrew Polk， an economist at consulting firm Trivium， believes that putting Huawei on the entity list “accelerates Chinas tech rise.” “It is going to ultimately prove the moment we lit a fire under China. And its not going to kill Huawei. Its going to do the opposite，” Polk was quoted by Quartz in 2019 following the U.S. blacklisting of Huawei.

It should be noted that U.S. sanctions will only enhance Chinese enterprises innovation ability. There are more and more reports that Chinas leading tech companies have been sharply increasing investment in developing semiconductors.

With a population of 1.4 billion and fastgrowing consumer power， China boasts a huge market for almost every industry， especially hi-tech industries. The U.S. bigoted practices against China can lead to the risk of losing the Chinese market in the long run.