Prof. ST Hsieh
Director, US-China Energy Industry Forum
October 19, 2022
The following news report is confusing and not helpful. Because it does not include any official clarifications or reiterations of the specifics of the recent US Export Control Measures so that US companies can develop practical measures on compliance. In this case, whether there was “large wave of resignations” or “I think it is extremely unlikely that every US citizen has quit,” it is a major and sudden disruption of many many US personnel’s livelihoods. Is there a better way?
One US reader’s comment: Mistakes, gaffs, walk-backs, corrections. When you read something henceforth, that this administration has done. Wait a couple days. Whatever it is, is an error, gaff, misinterpretation or mistaken media release.
Social media posts mislead over US nationals’ right to work on semiconductors in China
Rachel YAN, AFP Hong Kong Tue, October 18, 2022 at 8:17 PM
Following newly implemented US export control measures to limit China’s access to high-end semiconductors with military uses, a claim has circulated in multiple social media posts saying that the US government has forced “all Americans” working in China to resign or renounce their US citizenship. The claim is misleading: experts told AFP that while there was a “large wave of resignations” after the new rules came into force, the regulations do not entirely prohibit US citizens and companies from working in China. The new measures only specifically restrict US citizens and companies from working with Chinese companies or in China on certain types of semiconductors.
“Many people don’t know what happened yesterday,” reads this October 12 Twitter post written in simplified Chinese characters.
“In short, Biden forced all Americans working in China to choose between two options: either resign immediately, or renounce US citizenship.
“Then all the American executives and engineers of all semiconductor manufacturing companies in China resigned collectively yesterday — China’s semiconductor manufacturing was directly paralysed overnight. The lethality of one Biden sanction is greater than Trump’s useless sanctions for four years.”
The post has been shared more than 2,800 times since it was published.
The claim, however, is misleading.
US export controls
On October 7, the United States announced new export controls aimed at restricting China’s ability to buy and manufacture high-end chips with military applications, exacerbating tensions between the countries.
The aim was to prevent “sensitive technologies with military applications” from being acquired by China’s military, intelligence and security services, said US Commerce Department official Alan Estevez in a statement.
The rules include export restrictions on some chips used in supercomputing and toughen requirements on the sale of semiconductor equipment. The full list of new regulations is available here.
The measures do not “force” US citizens to choose between their citizenship or their job, as claimed in the misleading posts. The document states that, from October 12 onwards, the US would restrict “the ability of US persons to support the development, or production, of integrated circuits at certain People’s Republic of China-located semiconductor fabrication ‘facilities’ without a license”.
According to the US government, the term “United States Person means United States citizens (including minor children); United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organised in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States”.
Kevin Wolf, a former US Assistant Secretary of Commerce for Export Administration, told AFP the statements in the misleading posts were “not correct”.
“It is true that the amendments to the Export Administration Regulations (EAR) published on October 7, 2022 contained novel and expansive controls over the activities of ‘US persons’, whether corporations or individuals, involving semiconductor production activities in China, but they do not prohibit US persons from working in China or doing the other things mentioned,” said Wolf, who is currently a partner at the Akin Gump Strauss Hauer & Feld law firm.
Derek Scissors, resident scholar at the American Enterprise Institute and a member of the US-China Economic and Security Review Commission, told AFP that the claim is “mostly inaccurate”.
“Some US citizens working in China on technology, not all working on technology and certainly not all US citizens, are required to abide by a suspension in work activity,” said Scissors.
“It’s only a suspension. Their companies can apply for a license to continue that activity and licenses are already being granted. With a license, they can resume activity. They did not have to resign, only take leave, where the leave could be very short.”
Gregory C. Allen, a former director at the US Defense Department who is now working at the Center for Strategic and International Studies said the claim that “‘all the American executives and engineers of all semiconductor manufacturing companies in China resigned collectively on October 11’ is false”.
“It is true that there was a large wave of resignations, but it is extremely unlikely that it included all US citizen engineers and executives,” said Allen.
“Some US and international semiconductor equipment suppliers have temporarily directed their US citizen employees to halt providing all services to Chinese customers until they have determined how to put an effective compliance programme in place. However, ultimately, some sales will resume,” he added.