There was speculation early in the session that tensions between the US and China were set to ease following an FT report that the US Treasury department was "Attempting to water down an executive order from President Donald Trump that bars Americans from investing in Chinese companies with suspected ties to the People's Liberation Army".
So to set the record straight, Reuters first reported and this morning the Commerce Department confirmed that it's blacklisting Semiconductor Manufacturing International Corp. and more than 60 other Chinese companies "To protect U.S. national security."
The designation restricts companies from exporting U.S.-origin technology to the listed firms without a license, with a provision that effectively prohibits SMIC from acquiring technology to build chips with 10-nanometer circuits and smaller, the industry's top class of chips.
Other Chinese entities affected include those "That enable human rights abuses, entities that supported the militarization and unlawful maritime claims in the South China Sea, entities that acquired U.S.-origin items in support of the People's Liberation Army's programs, and entities and persons that engaged in the theft of U.S. trade secrets," according to the statement.
As Bloomberg notes, the majority of the newly banned companies are Chinese and will join the likes of Huawei Technologies Co. on a list that denies them access to U.S. technology from software to circuitry.
"If the report you mentioned is correct, it will be another example of how the U.S. is using its national power to crack down on Chinese companies," Chinese Foreign Ministry spokesman Wang Wenbin said at a briefing in Beijing on Friday.
Under President Obama, Commerce Department officials applied export restrictions more narrowly, typically penalizing companies that ran afoul of U.S. law, and sometimes removing them if corrective action was taken.
https://www.zerohedge.com/economics/us-blacklists-largest-chinese-chipmaker-60-other-companies
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