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U.S. to block blacklisted Chinese firms from securing technologies via affiliates

Published: 30 Sep. 2025, 09:07 Updated: 30 Sep. 2025, 10:48

This aerial view shows container ships berthed at a port in Qingdao, in eastern China's Shandong province, on Sept. 24. [AFP/YONHAP]

The U.S. Commerce Department unveiled a new rule Monday to prevent Chinese firms — listed for security and other risks — from using affiliates to secure U.S. technologies, as Washington continues efforts to curb the Asian superpower's technological advances amid an intensifying Sino-U.S. rivalry.

The department's Bureau of Industry and Security (BIS) issued the rule, under which any entity that is 50 percent owned by one or more entities on the "Entity List" or the "Military End-User (MEU) List" will be automatically subject to restrictions applicable to those on the lists.

Managed by the BIS for trade restrictions, the lists identify those believed to pose risks to U.S. national security or foreign policy interests. Listed entities are subject to U.S. license requirements for the export, re-export or transfer of U.S. technologies.

Also under the rule, "significant" minority ownership by an Entity List or MEU List company is a red flag that triggers additional due diligence requirements for exporters, according to the BIS.

"For too long, loopholes have enabled exports that undermine American national security and foreign policy interests," Under Secretary of Commerce for Industry and Security Jeffrey Kessler was quoted as saying. "Under this administration, BIS is closing the loopholes and ensuring that export controls work as intended."

Some observers said that the rule, if implemented, would affect business operations that a Korean or third-country company runs under a joint venture agreement with Chinese enterprises on the Entity List.

The restrictions in the rule will become effective 60 days after its publication in the Federal Register set for Tuesday.

Yonhap