Technically, the trade talks between China and the US, and even meetings between Xi and Trump, are on the agenda, but the US has quietly curtailed US exports to China, says business analyst Arthur Kroeber in the South China Morning Post. The ramifications of the US rule change became vividly apparent on September 30, when the Dutch government seized control of the chip firm Nexperia.
South China Morning Post:
Until recently, US exporters had to obtain a government licence to do business with any of the entities included on the lists. But in late September, the bureau broadened its rules: exporters now face restrictions not only when dealing with entities on the lists, but also with any company at least 50 per cent owned by entities on the lists.
US officials “depict this as a technical move” that closes an obvious loophole, but in reality “its impact is far from technical”, said Arthur Kroeber, partner and head of research at research firm Gavekal, in a research note published last week.
In practice, the new rules effectively expand the number of sanctioned companies, “probably by thousands or tens of thousands”, Kroeber said. Many of the companies affected by the rule change are Chinese.
What’s more, the new rules create an onerous compliance burden for businesses, as the responsibility for figuring out whether a given company is majority-owned by entities on the blacklists lies with US exporters. That means businesses must now conduct forensic due diligence on the ownership structure of many customers, Kroeber said.
The ramifications of the US rule change became vividly apparent on September 30, when the Dutch government seized control of the chip firm Nexperia.
Nexperia is a local company that in 2019 became majority owned by Wingtech, a Chinese chip firm that was put on the US entity list in 2021.
As Nexperia would be vulnerable to US sanctions under the new rules, the Dutch government’s move to take over the company and oust its Chinese CEO was necessary to preserve the firm’s unfettered access to the US market, Kroeber said.
More at the South China Morning Post.
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