China Helps With US Tech Firm Scrutiny in Sign of Easing Tension

(Bloomberg) -- Beijing has begun cooperating with US efforts to ensure American technology isn’t routed to China’s military, according to people familiar with the matter, a positive step in relations between the countries since their leaders met last month.

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China’s Ministry of Commerce is helping its domestic companies through end-use checks by the US, which Washington requires to take firms off its Unverified List, the people said, asking not to be named as the information is not public.

Chinese firms on the Unverified List have 60 days from Oct. 7 to show their products won’t go to a military end-use or risk being pushed onto the US Entity List, which prohibits trade with US businesses or those utilizing US-sourced technology without a license from Washington.

Relations between the world’s two biggest economies worsened in October after the Biden administration imposed broad curbs on China’s access to semiconductor technology and tools, with some analysts foreseeing little opportunity for reconciliation. A breakthrough meeting between Joe Biden and Xi Jinping last month in Indonesia opened the door for renewed cooperation on shared priorities including climate change, though deeper strategic issues remain, including over Taiwan, Hong Kong and the South China Sea.

Deadline Expiry

The leading memory maker in China, Yangtze Memory Technologies Co., is among the marquee names on the Unverified List, along with chip production equipment maker Shanghai Micro Electronics Equipment Group Co. and a subsidiary of Naura Technology Group. The expiry of their 60-day deadline is on Monday, however no announcement is expected on the day, according to one of the people. It’s unclear though which Chinese firms have undergone US checks.

Naura shares rose as much as 7.4% in China trading Tuesday.

The US Department of Commerce on Oct. 7 said that if it can’t complete checks on firms on the Unverified List within that timeframe, this will trigger an interagency process to move the entities concerned to the Entity List.

The Chinese Commerce ministry didn’t respond to a request for comment. A spokesman for the US Department of Commerce didn’t respond to a request for comment.

Chinese officials convened emergency talks with local semiconductor companies, including YMTC, in the wake of those October restrictions to assess the damage and pledge support for the sector. SMEE, a homegrown rival to Dutch firm ASML Holding NV, was added to the list earlier this year.

Washington has said its trade measures as closely tailored to prevent China’s military from obtaining advanced chips and technology. Outside of this point of friction, US-China trade looks on a path to set a record this year with the US already importing more than $418 billion in goods from China in the first nine months of the year.

--With assistance from Luz Ding.

(Updates with trading in sixth paragraph)

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