US expands China trade blacklist, closes subsidiary loopholes

The U.S. government on Wednesday added 80 entities to the U.S. Commerce Department's Bureau of Industry and Security's Entity List, reports the New York Times. The expansion of the list is designed to prevent or slow down the use of American technologies in China to improve its economic and military capabilities, and closes a critical loophole that allowed subsidiaries to dodge sanctions. China's advancements in AI, exascale supercomputing, quantum computing technology, and hypersonic weapons are named the main points of concern, reports Nikkei. 

The U.S. Department of Commerce's BIS has added 80 new organizations from China, Taiwan, the UAE, South Africa, Iran, and other countries to the Entity List for actions it deemed harmful to U.S. national security and foreign policy. Twelve organizations (11 in China, one in Taiwan) were involved in AI and supercomputing tied to China's military. Seven Chinese entities were involved in quantum tech development for military use, and two Chinese companies supplied restricted components to blacklisted Huawei and HiSilicon, according to the BIS. Other entities assisted China's military and nuclear programs in one way or another, or supplied U.S. parts to China or Iran. 

Perhaps the most noteworthy additions to the Entity List are six Inspur subsidiaries, including those that were used to bypass the U.S. sanctions against the parent company that were imposed in 2023. Among the six entities added, one is Inspur Taiwan, and another is Inspur Software. BIS alleges that Inspur — which is the largest server maker in China — illegally obtained restricted hardware developed by U.S. companies to build servers for its customers in China, including clients tied to the People's Liberation Army. The alleged operations were significant enough for Hewlett Packard Enterprise, one of the largest makers of servers, to start a legal battle against Inspur Group, alleging server patent infringements and violating U.S. sanctions. 

In addition, Henan Dingxin Information Industry, Nettrix Information Industry, Suma Technology, and Suma-USI Electronics were added to the U.S. Entity List for supporting the development of exascale supercomputers. Specifically, these companies supplied hardware from Intel and Nvidia, software from Microsoft, and manufacturing capabilities to Sugon (Dawning Information Industry), a previously blacklisted supercomputer maker tied to China's defense modernization. Essentially, these companies facilitated hardware and infrastructure essential for HPC and highly accurate large-scale simulations that are usually used for development of aircraft, rockets, and other weapons of mass destruction. 

Finally, the Beijing Academy of Artificial Intelligence and Beijing Innovation Wisdom Technology were added to the U.S. Entity List for their involvement in developing AI models and advanced computing chips intended for Chinese military use. According to the U.S. Department of Commerce, both entities were identified as working to acquire and apply American technology to advance China's defense modernization. 

"American technology should never be used against the American people," said Under Secretary of Commerce for Industry and Security Jeffrey I. Kessler. "BIS is sending a clear, resounding message that the Trump administration will work tirelessly to safeguard our national security by preventing U.S. technologies and goods from being misused for high performance computing, hypersonic missiles, military aircraft training, and UAVs that threaten our national security,” said Under Secretary of Commerce for Industry and Security Jeffrey I. Kessler. “The Entity List is one of many powerful tools at our disposal to identify and cut off foreign adversaries seeking to exploit American technology for malign purposes."