The United States is rolling out a series of export control measures to shut out China from advanced supply chains, including artificial intelligence (AI) data center components, robots, and solar and semiconductor materials. Part of the aim is to strengthen its negotiating leverage ahead of Chinese President Xi Jinping's visit to the US next month.
In response, China has struck back by restricting exports to the US of its domestic drone core components and related technologies.
According to Reuters on the 4th, the US Federal Communications Commission (FCC) is drafting a bill to ban imports of new Chinese-made optical transceivers, targeting implementation this year. An optical transceiver is a device that uses light to transmit and receive information between data centers. If the bill takes effect, it would block the possibility of Chinese companies stealing data stored in US data centers, installing malicious software, or disrupting services, Reuters explained.
The company expected to be hit hardest is Chinese optical communications firm Zhongji Innolight. According to Counterpoint Research, Zhongji Innolight is the leading company with a 27% share of the global data transceiver market. Zhongji Innolight was also added to the list of Chinese military-support companies designated in June this year by the US Department of Defense (Department of War).
News also emerged that day that the administration of US President Donald Trump is preparing to introduce a price floor and impose tariffs on "polysilicon," a key material for solar panels and semiconductors. This likewise aims to protect the US domestic polysilicon industry and check China. Separately, the US government raised the tariff rate on Chinese-made polysilicon and solar wafers from 25% to 50%, effective January 1 last year, based on Section 301 of the Trade Act.
In addition, trade regulations against Chinese products have been pouring out since late last month. On the 28th of last month, the FCC issued an import ban on foreign-made power inverters, humanoids, and quadrupedal walking robots. On the 24th, a 12.5% "forced labor tariff" took effect based on Section 301 of the Trade Act. Investigations into Chinese AI models and regulations on their adoption within the US are also being discussed.
Analysts say the US is accelerating measures to exclude China from advanced industry supply chains. Zhan Kai, a partner attorney at China's Dacheng Law Offices, explained, "The US government is gradually moving from a stage of blocking the transfer of technology to China toward blocking Chinese investment and Chinese companies' access to the US market itself." There are assessments that Xi's US visit, now a month away, also had an influence. US investment bank Jefferies interpreted the review of the optical transceiver import ban by saying, "Given China's rare earth export controls that affect the US optical communications industry, the risk of this measure actually being realized is low," adding, "We view it as a negotiating tactic deployed by the US government ahead of Xi's visit in September."
China has also mounted a counterattack. According to state broadcaster CCTV, China's Ministry of Commerce implemented related measures starting the 5th in response to regulation of Chinese companies. It decided to strictly review, on a case-by-case basis, exports to the US of domestic drones and their core components and related technologies, and not to apply simplified approval procedures. It also suspended post-inspections of factories that have obtained China Compulsory Certification (CCC), which had been entrusted to US certification bodies, and banned transactions with US testing firm Compliance Testing. China said this measure was a restrained response and warned that it would raise the level of retaliation further if the US implements additional restrictive measures against China.
