Washington's tightening of chip curbs on Beijing this week will intensify their battle for tech superiority and add more uncertainty to the relationship, according to observers.

They said the US move could also overshadow a possible meeting between the Chinese and US presidents at next month's Asia-Pacific Economic Cooperation forum in San Francisco.

The US commerce department unveiled new rules on Tuesday to upgrade its sweeping export controls on China's access to cutting-edge computer chips and manufacturing equipment announced by Washington a year ago.

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US Commerce Secretary Gina Raimondo said the new rules "confront the threats to our national security" posed by the Chinese government's military-civil fusion strategy. Photo: Reuters alt=US Commerce Secretary Gina Raimondo said the new rules "confront the threats to our national security" posed by the Chinese government's military-civil fusion strategy. Photo: Reuters>

The new rules aim to close loopholes in the previous curbs and prevent China's development of artificial intelligence for military use, according to US Commerce Secretary Gina Raimondo.

"Today's updated rules will increase effectiveness of our controls and further shut off pathways to evade our restrictions. These controls maintain our clear focus on military applications and confront the threats to our national security posed by the PRC government's military-civil fusion strategy," she said, using the acronym for China's official name - the People's Republic of China.

"The vast majority of semiconductors will remain unrestricted. But when we identify national security or human rights threats, we will act decisively and in concert with our allies," she added.

China's commerce ministry on Wednesday said Beijing was "strongly dissatisfied with and firmly opposes" the latest chip curbs, claiming Washington "abuses export control measures and implements unilateral bullying".

It called for the lifting of the export controls as soon as possible and warned that China will "take all necessary measures to resolutely safeguard its legitimate rights and interests".

On Tuesday, Chinese foreign ministry spokeswoman Mao Ning also urged Washington to "stop politicising and weaponising trade and tech issues and stop destabilising global industrial and supply chains".

Observers noted that Beijing's response so far had been measured, signalling China's inclination to play down bilateral differences amid preparations for an anticipated Xi Jinping-Joe Biden meeting.

The latest chip curbs also coincided with a forum in Beijing marking 10 years of Xi's signature Belt and Road Initiative, attended by representatives of over 130 countries including Russian President Vladimir Putin.

In a pointed message to the US and its allies that have called for reduced economic dependence on China, Xi warned against "unilateral sanctions, economic coercion, decoupling and supply chain disruption" during his keynote speech at the forum on Wednesday.

Shen Dingli, a Shanghai-based international relations expert, said the latest move showed Washington was zeroing in on China's ability to produce advanced chips.

He said the release of 5G-capable Mate 60 phones by Huawei Technologies during Raimondo's China visit in August had dealt a blow to the US chip restrictions and raised alarm about Beijing getting around those curbs.

The updated rules impose licence requirements on exports of advanced chips to more than 40 additional countries that could divert the technology to China. In an effort to limit China's access to chip-making tools essential to producing advanced integrated circuits needed for the next generation of advanced weapon systems, licence requirements for the equipment also apply to China and Macau, and 21 countries under US arms embargoes.

Shen noted the US had also shifted focus from communication speed limits to computing performance when adjusting its curbs on semiconductor exports. Earlier this month, the US commerce department extended waivers to Taiwan Semiconductor Manufacturing Co (TSMC) and South Korea's two chip-making giants Samsung and SK Hynix, allowing them to keep receiving certain US chip-making equipment at their Chinese plants.

The new rules underlined Washington's changed priority - to hobble Beijing's efforts to develop the most advanced computing power, which would be the key for the US to maintain its technological and military superiority for longer, according to Shen.

"The US has tightened its controls in some aspects, while relaxing its restrictions in others. They are not entirely because of the US-China summit, but also for the overall national security interests of the US to control China more effectively. There is no need to do things that are effective in the short term but not effective in the long term, which will weaken relations with US allies, and weaken economic relations between the US and China," he said.

"The US has become increasingly pragmatic as it tries to advance its goals while balancing its ties with key allies [who are indispensable in its efforts to curb China's rise]. The US does not want to hurt its own business interests or harm the legitimate economic interests of its allies because of its own security interests," he said. "Washington's overall goal is to restrict China from catching up with the US in core areas, but at the same time it is reluctant to see itself being weakened due to those restrictions on China."

He noted that the US was aware of the limits of these kind of technological restrictions on China, which could give Beijing more incentives to innovate and seek breakthroughs on its own. He said they could even backfire on Washington, citing America's efforts to curb China's development of supercomputers.

Xi Jinping and Joe Biden could meet next month at the Apec summit in San Francisco. Photo: AFP alt=Xi Jinping and Joe Biden could meet next month at the Apec summit in San Francisco. Photo: AFP>

Pang Zhongying, an international affairs professor at Sichuan University, said the revamped export restrictions on advanced chips as well as the bold signals from Beijing at the belt and road forum showed both sides were determined to double down on their rivalry.

"While Biden and his senior administration officials insisted that the US is not seeking to decouple from China but to 'de-risk' the relationship, there is little sign that either is changing their course. The latest development would inevitably cast doubt on the prospects for bilateral ties despite some signs of thawing after the resumption of high-level communications and dialogue, further dampening hopes for the Xi-Biden summit," he said.

Neither Beijing nor Washington has confirmed Xi's attendance at the Apec summit in November.

While Shen also agreed there is little chance that the deeply fraught US-China ties could see substantive improvement any time soon, he believed the latest US chip curbs were unlikely to derail efforts to arrange the first face-to-face meeting between Xi and Biden this year.

He said he had "100 per cent confidence" the two leaders would meet in San Francisco next month, and that it could help stabilise ties and ease tensions.

"There's no way the just-announced chip sanctions can be eased. If China is not satisfied, it may choose not to go [to the Apec summit]. But [China's absence will be] bad for Washington and even worse for Beijing, because the benefits [of a Xi-Biden summit] outweigh the negative factors," Shen said. "China must carefully consider its overall interests before reaching a final decision."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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