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

THE Biden administration on Thursday (Mar 2) announced export restrictions for dozens of Chinese entities, including server maker Inspur Group and units of genetics firm BGI Research, 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 modernisation efforts. The department also cited companies providing support to Russia’s military.

Among the notable additions is Inspur Group, the state-affiliated maker of computer servers that’s benefited from data centre 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.

Loongson is considered a potential alternative in the future for Intel chips, while Inspur competes directly with servers made by the likes of HP and Dell Technologies.

Another company cited is 4Paradigm Technology, an up-and-coming artificial intelligence (AI) unicorn backed by some of the world’s biggest investors including Sequoia Capital, Goldman Sachs Group and Mubadala Investment.

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.

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US companies are banned from exporting to the listed entities without prior government approval. The Commerce Department’s Bureau of Industry and Security declined to comment beyond the federal register notice.

The US government cited specific concerns for groups of companies, including “support of China’s military modernisation” and “contributions to ballistic missile programmes”.

The sanctions that cover Inspur are similar to those imposed on Huawei Technologies, 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 Research 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 utilised in the repression of ethnic minorities in China,” the release says.

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. BLOOMBERG