China Strongly Rejects U.S. AI Export Control Regulations

On Monday, China's Ministry of Commerce (MOFCOM) publicly expressed strong opposition to the new artificial intelligence (AI) export control measures put forth by the United States. The ministry highlighted that these actions will significantly harm the interests of businesses worldwide, including those within the U.S. They emphasized their commitment to taking necessary steps to defend China's legitimate rights and interests.

The U.S. government, under the Biden administration, announced an Interim Final Rule about Artificial Intelligence Diffusion on the White House website. This new regulation aims to tighten restrictions on the export of AI chips and technologies. It proposes limitations on the number of AI chips that can be exported to most countries while allowing unrestricted access to U.S. AI technology for America's closest allies. In contrast, countries like China, Russia, Iran, and North Korea will face a complete ban on these exports, as reported by Reuters.

A spokesperson for MOFCOM pointed out that the newly introduced regulations further complicate export controls on AI chips, model parameters, and related items. They will also extend long-arm jurisdiction, hindering third parties from conducting normal trade relations with China. The spokesperson noted that many U.S. high-tech companies and industry groups had earlier voiced their dissatisfaction with these measures, arguing that they were rushed and lacked adequate discussion. They cautioned that such excessive regulations in the AI sector would lead to serious negative consequences and urged the Biden administration to reconsider.

Despite these concerns, the Biden administration appeared to disregard the appeals from the industry and pressed on with implementing the measures. The MOFCOM spokesperson criticized this rush as a misapplication of national security concepts and an abuse of export controls, claiming it also violates international trade rules.

According to the spokesperson, the misuse of export control measures by the U.S. obstructs normal economic and trade exchanges among nations. This disruption leads to a significant impact on global technological innovation and undermines the interests of enterprises globally, including American companies.

The commitment from China to protect its legitimate rights and interests was reiterated by the spokesperson. Additionally, semiconductor manufacturer Nvidia released a statement indicating that the Biden administration's new “AI Diffusion” rule aims to restrict access to mainstream computing applications, potentially stifling global innovation and economic growth.

Nvidia noted that these export controls, presented as measures against China, do not effectively enhance U.S. security. Instead, they would control technology on a worldwide scale, including technologies already widely available in consumer devices. This approach may weaken America's global competitiveness, undermining the innovation that has historically maintained its technological leadership.

Furthermore, Ken Glueck, Oracle's executive vice president, commented that the Biden administration's framework for AI export controls might be one of the most damaging regulations ever to affect the U.S. tech industry. He emphasized that it is more about extreme regulatory overreach than about safeguarding U.S. interests or those of its allies.

He cautioned that without careful consideration of the rule's implications, the U.S. might inadvertently hand the majority of the global AI and GPU market to its Chinese competitors.

New restrictions will be placed on advanced graphics processing units (GPUs), which are essential for powering data centers for training AI models. About 18 countries, including Japan, the United Kingdom, South Korea, and the Netherlands, will be exempt from these new regulations. However, 120 other nations, including Singapore, Israel, Saudi Arabia, and the United Arab Emirates, will have restrictions imposed, while countries like China, Russia, and Iran will face a complete export ban.

Industry analyst Ma Jihua noted that these restrictive policies merely reveal the U.S. strategy of forming a 'small circle' of allies aimed at containing China. He remarked that while U.S. interests might be considered, the measures adversely affect the global semiconductor industry and inhibit domestic companies within the U.S.

Although some exemptions apply to allies, these manufacturers must navigate a global market. Restricting exports to other countries will shrink market size and significantly impact sales for American semiconductor firms. The semiconductor industry prides itself on a highly globalized market that depends on the international procurement of materials and sales.

U.S. policymakers seem to believe that by limiting exports of high-end chips, they can prevent other countries from catching up. However, Ma argues that this belief is misguided, as evidenced by ongoing advancements in Chinese technology despite previous U.S. export restrictions. Domestic Chinese firms and computing centers increasingly rely on local chips, reducing their dependence on American technology.

Moreover, China has developed domestic alternatives for GPUs, indicating that U.S. attempts to hinder China's AI development through export limits might not be effective.

China, AI, Export, Regulation, Technology