China’s Response to the U.S. Expansion of Chip Restrictions (AI Translation)

【周刊提前读】美对华限芯扩至全球 反噬效应与中国应对正在起变化

In the concluding days of President Biden's administration, a sweeping export control regulation named the "Interim Final Rule on Artificial Intelligence Diffusion" was unveiled. This policy expands export restrictions on AI chips from a China-focused approach to a global scale, significantly impacting the American tech sector and drawing sharp criticism from industry giants like Oracle and NVIDIA [para. 1][para. 3]. Oracle warns of a massive reduction in the U.S. share of the global chip market, potentially losing 80% in market value and ceding ground to China. Meanwhile, NVIDIA witnessed a stock decline of over 10% shortly after the rule's announcement [para. 2][para. 4].

This regulation follows three prior policy rounds targeting Chinese advancements in artificial intelligence over the past few years. The new rule stipulates that exporting advanced AI technologies, including hardware and software, requires U.S. approval regardless of the destination. Certain nations, particularly those considered adversaries, face harsher restrictions [para. 5][para. 6]. The European Union has expressed opposition, desiring unhindered access to U.S. AI technology, emphasizing shared economic interests between the EU and the U.S. [para. 8][para. 10].

Countries classified as dangerous, including China, Iran, and Russia, now contend with escalated restrictions. "Intermediate countries," which include nations like Singapore and Saudi Arabia, face a quota system limiting their AI model advancements [para. 9][para. 12]. The policy aims to forestall the organization of large computing infrastructures in nations unfriendly to the U.S. through a global quota on AI compute power [para. 13][para. 14].

In response, China's Ministry of Commerce criticized the unilateral advantage granted to U.S. firms through subsidies. China threatened to pursue trade remedy investigations, contributing to an upward surge in Chinese chip stocks [para. 15][para. 16]. The Chinese tech industry, while grappling with reduced access to advanced computing technology, continues to innovate and identify growth opportunities in international AI markets [para. 17][para. 18].

Amid these developments, the U.S. Bureau of Industry and Security further broadened export controls, lowering the nanometer chip specification limits and listing additional AI and computing companies from China and Singapore on the Entity List [para. 19][para. 20]. Cloud service providers in allied countries can secure exemptions by agreeing to stringent conditions on AI computing power allocation. Nonetheless, the policy primarily disadvantages American firms by potentially diminishing their access to emerging markets, like those in the Middle East [para. 22][para. 25].

The global controls effectively elevate restrictions worldwide, bringing them nearly on par with those previously imposed solely on China. The regulations could harm American industries more than China, driving nations to turn to China as an alternative partner [para. 26][para. 30]. Under the Biden administration, export restrictions intensified, although the policy direction remains consistent with Trump's approach, reflecting bipartisan perspectives on containing China's technological advancement [para. 27][para. 31].

Protests against the rule erupted, with American companies fearing a competitive disadvantage globally. NVIDIA and Oracle opposed the policy, arguing that it not only limits U.S. technological growth but also aids China's AI development [para. 34][para. 36]. There exists a strategic pivot toward "Sovereign AI," driven by collaboration between tech firms and governments to independently develop AI infrastructure without relying on U.S.-based computing resources [para. 37][para. 40].

The regulation's intent to preserve U.S. technological leadership might backfire, as diversifying chips and AI capacities elsewhere obstructs American companies’ market opportunities abroad. The geopolitical landscape for artificial intelligence and semiconductor use sharpens as both established and emerging nations, including China, aim for self-reliance in key technologies [para. 44][para. 47].