US expands crackdown on China with export ban on Inspur, BGI

WASHINGTON: The Biden administration on Thursday announced export restrictions for dozens of Chinese entities, including server maker Inspur Group Co and units of genetics firm BGI, citing activities contrary to US national security and foreign policy interest.
The Commerce Department added a number of companies to the so-called Entity List for acquiring or attempting to acquire US-origin items in support of China’s military modernization efforts. The department also cited companies providing support to Russia’s military and supply sanctioned parties in Iran.
Among the notable China additions are Inspur Group, the state-affiliated maker of computer servers that’s benefited from datacenter construction nationwide, and Beijing-based CPU maker Loongson. Both are regarded as integral to the government’s effort to replace foreign-made technology and propel domestic innovation.
The US has been wielding the export control power of the Commerce Department, headed by Gina Raimondo, as one of its main tools to stifle China’s technological ambitions and bolster national security.
“There have been times in America’s history of intense global competition with another superpower who does not share our values,” Raimondo said in the interview at Bloomberg’s office in Washington earlier Thursday. “This is one of those times.”
Loongson is considered a potential alternative in the future for Intel Corp. chips, while Inspur competes directly with servers made by the likes of HP Inc. and Dell Technologies Inc.
Another company cited is 4Paradigm Technology Co, an up-and-coming AI unicorn backed by some of the world’s biggest investors including Sequoia Capital, Goldman Sachs Group Inc and Mubadala Investment Co. The US also added Chinese agencies such as the National Research Center for Parallel Computer Engineering and Technology and the Wuxi Institute of Advanced Technology.
Inspur Electronic Information Industry Co. fell its daily limit of 10% Friday, on top of losses of between 4% and 17% among other group affiliates listed in Hong Kong and mainland China. Loongson Technology Corp. slid in Shanghai.
“There are so many different topics here,” said Cordell Hull, who led Commerce’s Bureau of Industry and Security during the Trump administration and is now a principal at national security advisory firm WestExec. “It’s a broad collection of Chinese entities spread across various topics and demonstrates the wide-ranging concern the US government has about the PRC’s activities around the world, and attempting to ensure that US technology isn’t furthering that malfeasance.”
‘Economic Bullying’
China’s Ministry of Commerce said in a statement that it opposed the Entity List additions and urged Washington to end its “unreasonable suppression” and “economic bullying,” adding that the move also undermines global supply chains. It also said it will take “necessary measures” to safeguard the interests of its companies.
US companies are banned from exporting to the listed entities without prior government approval. The US government cited specific concerns for groups of companies, including “support of China’s military modernization” and “contributions to ballistic missile programs.”
“When we identify entities that pose a national security or foreign policy concern for the United States, we add them to the Entity List to ensure we can scrutinize their transactions,” Assistant Secretary for Export Administration Thea Kendler said in a statement. “In addition to screening against the Entity List, exporters and those transacting in items subject to our regulations need to exercise careful due diligence to determine whether such items may be diverted to prohibited end-uses or end-users.”
The sanctions that cover Inspur are similar to those imposed on Huawei Technologies Co., and apply to US shipments as well as foreign-made items produced with US-origin tools or technology, which effectively means all semiconductors on the planet are covered, said Kevin Wolf, a partner at Akin Gump Strauss Hauer & Feld.
The US has also added BGI to the list, a reflection of the administration’s use of the blacklist to address human rights violations.
“The addition of these entities is based upon information that indicates their collection and analysis of genetic data poses a significant risk of contributing to monitoring and surveillance by the government of China, which has been utilized in the repression of ethnic minorities in China,” the release said.
In 2020, two BGI affiliates, Beijing Liuhe BGI and Xinjiang Silk Road BGI, were among 11 Chinese companies added to the US Commerce Department’s entity list over their alleged implication in human rights abuses in Xinjiang. BGI then issued a response saying there was no basis for including the subsidiaries on the list, and that the company strictly abides by all international business practices and laws.
Overall, the Commerce Department cited 18 entities in China for allegedly supporting the country’s military, 14 entities in China and Pakistan for work on ballistic missile programs, six entities in China and Burma for alleged human rights violations and three entities in Russia, Belarus and Taiwan for supporting Russia’s military.

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