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The United States blacklisted seven Chinese supercomputing companies this week for allegedly conducting activities contrary to U.S. national security or foreign policy, contending that they are assisting the People’s Liberation Army with a variety of activities, including China’s weapons of mass destruction efforts.
The Commerce Department announced that the Bureau of Industry and Security had placed the seven Chinese companies on the U.S. Entity List. The U.S. says that the companies (Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi, and the National Supercomputing Center Zhengzhou) are “involved with building supercomputers used by China’s military actors, its destabilizing military modernization efforts, and/or weapons of mass destruction programs.”
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The United States continues to tighten controls on the People’s Republic of China. In this article we address three regulatory changes that highlight the need for enhanced due diligence when dealing with China: 1) restrictions on recent additions to the Entity List; 2) controls on military end-uses and military end-users; and 3) elimination of Hong Kong as a separate destination under the Export Administration Regulations (EAR).
Entity List
On December 22, 2020, the Bureau of Industry and Security (BIS) added 59 Chinese entities to the Entity List, thereby expanding the licensing requirements on export transactions with these entities. See Notice at 85 Fed. Reg. 83416. The additions to the Entity List are the result of the collective determination by the Departments of Commerce, State, Defense, Energy, and where appropriate, the Treasury (collectively, the “End-User Review Committee”) that these entities are engagi
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On December 23, 2020, the U.S. Department of Commerce Bureau of Industry and Security (BIS) issued the anticipated list of designated military end users (MEU List) under Section §744.21 (MEU Rule) of the Export Administration Regulations (EAR) Restrictions (
see Federal Register notice). This MEU List provides a first tranche of over 100 designated military end users from China and Russia. Per Commerce Secretary Wilbur Ross, this action establishes a new process to designate military end users on the MEU List to assist exporters in screening their customers for military end users (
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This week, the U.S. Department of Commerce formally named 103 Chinese and Russian companies to its new Military End User (“MEU”) List. A long time in the publication and release process, the MEU List identifies entities that the U.S. Government has determined represent “an unacceptable risk of use in or diversion to a ‘military end use’ or ‘military end user’ in China, Russia, or Venezuela.” With the U.S. Government’s action this week, a license will be required to export, reexport, or transfer (in-country) designated items to entities on the MEU List.