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China's tech sector whitelist cuts off foreign entities, with one exception

Ibm 2nm Chip
Ibm 2nm Chip (Image credit: IBM)

What you need to know

  • The U.S. and China have been locked in a heated, years-long technology battle.
  • As the U.S. continues to tighten its grip on Chinese tech companies, China remains focused on building up domestic developments so it will no longer have to rely on foreigners.
  • China has crafted the Xinchuang committee, otherwise known as a sort of country-spanning whitelist, to prioritize domestic powerhouses over foreign ones.

The U.S. has been doing its best to keep key technologies out of Chinese hands, as can be evidenced by the recent SK Hynix situation. And even when the U.S. isn't actively roadblocking technology transportation, it's placing sanctions and otherwise inconveniencing Chinese tech companies. So, China has doubled and tripled down on its domestic efforts, to the point where it has a whitelist to determine which companies are primarily China-based and will, by extension, receive preferential treatment.

As reported by Bloomberg, China's Information Technology Application Innovation Working Committee (its website can be found here) now has an "IT Application Innovation" plan underway. The plan and its associated committee go by the name "Xinchuang." It will whitelist and promote domestic tech companies for critical domestic sectors, excluding foreign companies in the process. Profitable spaces such as Chinese banking will be handled by companies on the whitelist.

China has also tightened its stance on technologies and companies in data security. It has forced Microsoft and Amazon Web Services to operate via joint ventures for their mainland business activities. And as for the whitelist, any company that's foreign-owned to the tune of more than 25% is excluded by Xinchuang. That means no whitelisting for Microsoft or Intel in the sectors Xinchuang covers.

Even Chinese startups such as Tencent have to tread carefully due to their reliance on foreign investments. Companies like these have to apply through local subsidiaries for a shot at getting in Xinchuang's good graces. While that trick may not be enough for every company to score a spot on China's list of chosen partners, it does show that there is an exception to the rule, so long as local subsidiaries remain a viable option.

This is all part of the bigger picture surrounding the chipmaking war being waged between the U.S. and China.

Robert Carnevale is the News Editor for Windows Central. He's a big fan of Kinect (it lives on in his heart), Sonic the Hedgehog, and the legendary intersection of those two titans, Sonic Free Riders. He is the author of Cold War 2395. Have a useful tip? Send it to robert.carnevale@futurenet.com.

16 Comments
  • The U.S. needs to incentivize their tech companies and their suppliers to diversify from China ASAP. With the policies China is pursuing they will be independent of the U.S. technologically very soon (technically they already could be because we know they don't respect intellectual property rights), but the U.S. is still extremely dependent on Chinese manufacturers and suppliers in Shenzhen. This is a terrible situation to be in given China's growing aggression and increasing threats to the Republic of China.
  • China isn't just a threat to Taiwan. They are a threat to everybody around them.
    India, Vietnam, Phillipines, Bhutan, Nepal, Australia, Japan, and even Russia. They threatened to nuke Japan just a few weeks back. They stated they see Vladivostock and the russian east coast as historically theirs. Just as they see the entire south china sea as theirs.
    They always have.
    The only difference between Xi and those that came before is Deng and co were planning for 2050 and Xi for 2025.
    They are quite open about this.
    Take them at their word, act accordingly.
  • Russia and China follow one simple idea. The enemy of my enemy is my friend.
  • @fjtorress Linguistics plays a massive part of the national conversation. It can be used to rally people behind whatever concept - good or bad. Case in point, by people not distinguishing the Communist Party of China and Chinese people - just calling them "China" has provided a rallying cry for the CCP to push the masses behind their horryfing agenda. People need to remember, not all chinese people act let alone think like the CCP. Otherwise we're all f'd.
  • It's a difference that makes no difference: they still steal IP, plunder other nation's fishing
    zones, bully everybody that'll let them, build missiles and nukes by the thousand. And they're still the most xenophobic society on earth. After 100 years of CCP ultranationalistic indoctrination it's all they know. A misguided fool will still kill you as dead as a rabid psychopath. Here: https://www.youtube.com/watch?v=Few8kJ0zfnY The time for coddling and hoping "engagement" might lead to change is over. They don't want to change. Self defense isn't just for misguided teenagers walking into a riot.
    Societies need to protect themselves, too.
  • TechFreak1 and fjtorres, I agree with you both of. Yours are not mutually exclusive positions. When you have communist/socialist governments, they must oppress their people to hold onto power, because other than a small percentage, very few are willing to give up all freedom for the good of the many, as that good is defined by government. China is the problem, because the Chinese people have no control over what China does. It's run by the Communist party, for the party's benefit. Equally concerning is that many American's don't seem to learn the lesson from the dozens of historic examples, and we still see pro-socialist people in the U.S., some of whom reach political office (e.g., Bernie Sanders, AOC and other members of the "Squad"). Their actions and policy positions weaken and reduce the US ability to stand up to China and protect all of us, ultimately, that even includes the Chinese people.
  • Couldn't edit my last post for some reason: the "good of the many" is semi-sarcastic. There are no doubt those who truly believe it's good to tax from one group in order to help others -- that feels like Robin Hood and helpful. But the problem is that everyone has a different definition of "good." For me, it might be medical care for my kids or good accessible Internet (and a Surface Duo). For others it could be access to education. For others it might be defined as ensuring everyone has access to food and shelter. For others it might be about the environment. For others it might mean a short work week and time to pursue artistic preferences. When government controls, a small group of people make these decisions for everyone. When freedom determines, businesses find opportunities and in pursuit of profit find solutions for those who want them and compete to drive down costs, making these benefits more broadly available to those who want them. Private charities arise to support others. Freedom is always better than government control.
  • @Hanley Gibbons the only reason why the US and much of the world is dependent on Chinese manufacturers. Is because the fat cats sought and took advantage of the gross human rights violation to take advantage of "cheap labour", so these a***wholes are also equally culpable. Along with the warhawks on every side who kept peddling cold era mentality and the old fashioned notion of the national security advantage. Where has that gotten humanity? Nothing but endless conflict.
  • TechFreak1, you are correct on the cause, but incorrect on your judgement of it. Those same "fat cats" are the reason Taiwan, South Korea, and Japan are modern, robust economies today who in turn spend billions of dollars on US goods and provide great products and services that we value. The difference is that the Chinese communist government doesn't permit market forces to drive the good that it normally does (more on that in a moment). The fundamental boon of capitalism is that businesses, looking to boost profits, will always try to cut costs, as long as that helps their overall profitability. So if they can hire people where labor is cheaper, all else being equal, they'll do that. To us, working conditions may seem poor, but for the workers in those places, it's generally a big upgrade over the alternatives -- the sweat shop is safer and offers better working conditions than the field (unless they were lied to about the conditions and terms of their employment, which absolutely has happened, in which case the business owner(s) should indeed be liable and prosecuted). If there's a spot in the world with cheap labor, many companies will try to hire there, ultimately competing for a shrinking pool of available labor, and boosting wages, offering enhanced benefits, etc. Eventually, the appeal of moving jobs there (cheap labor) goes away, but not until the standard of living has skyrocketed. That's why countries that embrace capitalism quickly grow to first world countries without anyone ever needing a benevolent intent. Conversely, this is the same reasoning as to countries that abandon it (like Cuba and Venezuela) see a plummeting standard of living. The wrong assumption socialists and those without an economics education make is that things are static. They are not. They change due to market and competitive forces. Capitalism's profit motive may seem cold in the short term, but it is the ONLY system that harnesses the natural drive of people to better their lives, help their family, and pursue the products and lifestyle they want in a way that helps everyone. It harnesses that through the competitive forces that ensure constant small improvements, which over time are far greater than any that can be planned and forced by a government. Adam Smith wrote clearly about this as far back as the late 18th century, but now, even with over 2 hundred years of supporting historic data validating this theories as thoroughly as we have validated Newton's theory of gravity, ignorance on his fundamental description of human behavior is sadly the norm. The problem in China is that they artificially depress the value of the Yuan, keeping the external apparent cost of labor low, to the detriment of the Chinese people. They are effectively keeping wages low in China to make the rest of the world dependent on Chinese manufacturing. This is why tariffs, something I normally oppose as a destructive tax, are appropriate against China for as long as they are stealing IP and manipulating currency, and otherwise avoiding playing by the same rules as the rest of the world.
  • One added point (sorry for being so long-winded): these advantages to capitalism are not limited to rising wages, benefits, and improved product and service choices for consumers. They also provide social good. Profit motive (wanting sales from discerning customers) is why companies pursue and promote green initiatives, why tuna took care to avoid trapping dolphin (remember "dolphin-free"? until that become the norm, it was a promotional point), community service, fairness, etc. Many customers prefer to buy from companies whose brand or values match their own. That's how we influence corporate policy with our wallets, and that's also part of capitalism.
  • No need to apologize.
    All good points routinely ignored by the technically illiterate mainstream media.
  • To all of the American (and other) companies that decided to move manufacturing to China to save money and "drive" profit: you made your bed... and your grave--now you'll have to lie in it.
  • Indeed, these companies flocked to China and utilized the gross human rights abuses to get access to “cheap labour”, so it was only natural the people wouldn't tolerate this b.s. What did these greedy fat cats thought was going to happen? People wouldn't take advantage of having access to the IP, production and plant knowledge as well access to factories? Thus, we had a flood of knockoffs and flurry of imitations. Then the farce of “IP theft legal” battles. The next phase is actual domestic products that either exceed, match or perform below established counterparts. Therefore giving the market, the low, med and high end tiers. Of course there's the political aspect but that's not point of conversation here.
  • Glenn2020, I share that sentiment. I would say that in some cases, especially companies that got in decades ago and not just for access to cheap manufacturing, other than the fact that China was run by a communist government, there weren't the same warning sigs that we see today. I'm willing to cut them a little bit of slack, if they do the right thing today.
  • What is the one exception
  • Probably Google, who gave the CCP AI tech they refused to sell to the US.