US Looking to Make China Export Controls More Strategic, Targeted, Raimondo Says

The U.S. is looking to “aggressively” reform and bolster its export controls and investment screening tools to counter China, particularly surrounding emerging and foundational technologies, Commerce Secretary Gina Raimondo said, speaking Nov. 30 at the Massachusetts Institute of Technology. Raimondo outlined what she called the U.S.’s “economic competitiveness strategy” toward China, stressing that the administration isn't looking to sever trade ties with the country but that companies in sensitive sectors should be reassessing business with China.

“We are not seeking the decoupling, in any way, of our economy from that of China’s,” Raimondo said. “But we want to promote trade and investment in areas that do not threaten our national security interests or our human rights values.”

Part of that effort includes strengthening export restrictions and other trade tools to prevent China from acquiring advanced technologies that could power its military, Raimondo said. She pointed to “three families” of technologies that will be of “particular importance” over the next decade: computer-related technologies such as microelectronics, quantum information systems and artificial intelligence; biotechnology; and clean-energy technologies.

“We're going to continue to take actions to protect the advantage and the lead that the United States has, to protect our lead as much as possible, as long as possible, in these foundational technologies,” Raimondo said.

To accomplish this, the U.S. is “moving aggressively to reform and modernize our current abilities and create new ones,” she said. That includes being “more strategic with our export control policies and our investment screening frameworks,” Raimondo said, pointing to Commerce’s October export controls that are designed to restrict China’s ability to acquire advanced computing chips and manufacture advanced semiconductors (see 2210070049).

“For too long, America’s export control strategy was reactive. I sometimes call it whack-a-mole. It was focused on preventing China from expanding its technological capabilities after it accessed American intellectual property,” Raimondo said. “We need to continue to move toward a strategy of being more strategic and more targeted with a laser focus, always, to protect our national security.”

The U.S. is also looking to modernize how it screens investments through the Committee on Foreign Investment in the U.S., she said. President Joe Biden in September signed the first executive order to give specific presidential direction to how the U.S. conducts foreign direct investment reviews (see 2209150053), and Raimondo said the administration is working with Congress and industry to determine how best to limit risks stemming from U.S. outbound investments in critical technology sectors. The White House believes an outbound investment screening regime could help fill certain gaps in semiconductor-related export controls (see 2209140041).

The U.S. will need to pursue many of these initiatives multilaterally, Raimondo said. The administration is trying to convince allies to impose similar export controls on China’s chip industry (see 2210270047)​​; Raimondo reportedly told U.S. companies that multilateral restrictions could take nine months (see 2211040014 and 2211040051).

“In our competition with China to shape the 21st century global economy, we cannot go at it alone,” Raimondo said, adding that the U.S.-EU Trade and Technology Council will meet next week in Washington to “align our approaches on secure supply chains, export controls, data governance and investment screening.”

She also said the administration is looking to expand U.S. exports to other parts of Asia through the Indo-Pacific Economic Framework, specifically mentioning Indonesia, Malaysia and Vietnam. “I think it’s going to be a kind of supply chain diversity accelerator in a time when every business is trying to figure out how to have their supply chains be more resilient,” she said. “The IPEF will accelerate that supply chain diversification by facilitating U.S. companies to do business in that region and to have more competitive sources of production and suppliers.”

And even though she said diversification is important, the administration still wants American companies to “thrive in global markets, including in China,” Raimondo said. “But we have to be real. As I’ve said, things have changed. And we have to be sober about China’s current direction of travel.”