- As the US and China are fighting for technological leadership, analysts in both China and the US are expecting an accelerated decoupling between the two major powers.
- The political divisions between the two countries have been on stark display ever since former President Trump initiated the Trade War against China. The Biden administration so far has not toned down the previous administration’s hawkish approach vis-à-vis China.
- In fact, Biden expanded US export controls on Chinese companies. For example, the Biden administration has added several dozen Chinese companies to the US Entity List. Simultaneously, Biden is lobbying partner countries to tighten their export controls on China as well. Reportedly, the US has been lobbying the Dutch government to further restrict export of ASML’s crucial semiconductor machinery to SMIC.
- Data from the US Commerce Department’s Bureau of Industry and Security (BIS) also shows that the Biden administration has further tightened controls on tech exports. The graphic shows the percentage of granted and denied export licenses for controlled goods to China. In 2021, 9 percent of license applications have been denied by the BIS, up from 2 percent in 2018.
- Even though the approval rate (67 percent in 2021) still seems high, most companies only apply for an export license if they are fairly certain to receive the approval, thus skewing the data in the direction of approvals, as pointed out by William Reinsch from CSIS.
- The increase in license denials by the BIS is also visible in reduced exports of Advanced Technology products from the US to China. In 2020, ATP valued at around $30 billion was exported to China, down from almost $40 billion in 2018.
Sinolytics is a European research-based consultancy entirely focused on China. It advises European companies on their strategic orientation and business activities in the People’s Republic.