New U.S. Rules Further Enrage the CCP; Japan Also Tightens Export Controls on Chinese Companies

Huawei logo at Huawei Technologies France in Boulogne-Billancourt

[People News] According to Voice of America, on September 29, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) announced new rules aimed at preventing blacklisted companies from using subsidiaries to circumvent U.S. sanctions. The U.S. Commerce Department stated that the new rules close loopholes and strengthen the overall export control mechanism.

Under the new rules, any entity in which one or more entities on the Entity List or the Military End User List own at least 50% equity will automatically be subject to Entity List/Military End User List restrictions.

In addition, if a company on the Entity List/Military End User List holds a significant minority stake, it will also trigger warnings and require additional due diligence. Previously, the Entity List and Military End User List completely excluded all entities not specifically listed, even if there were extensive corporate and financial ties between listed and unlisted entities.

The U.S. Entity List is a global list of sanctioned entities, including universities, research institutes, and companies. Entities on the list are foreign companies, organizations, individuals, or other entities deemed to have engaged in activities that violate U.S. national security or foreign policy interests. Unless authorized by the U.S. Department of Commerce, U.S. persons and companies are prohibited from engaging in exports, reexports, or domestic transfers involving export-controlled items with these entities.

As of March this year, the Entity List included 3,351 entries, 1,300 of which were related to Chinese companies, with many others being CCP-affiliated overseas agents.

Statistics also show that as of January 2025, BIS issued 40 China-related U.S. blacklists: 2 in 2018, 5 in 2019, 7 in 2020, 6 in 2021, 2 in 2022, 11 in 2023, 6 in 2024, and 1 in 2025. The U.S. blacklist includes 129 Chinese research institutions (research institutes/academies/centers), 16 individuals, 9 universities, 19 state organs, and 798 related enterprises.

From the blacklist, Chinese tech giants with CCP ties—Huawei, ZTE, Hikvision, etc.—are all included. That is, Chinese companies on the U.S. blacklist, including these giants, whose subsidiaries are over 50% owned, will have those subsidiaries automatically subject to U.S. sanctions or export control lists.

Take Huawei as an example. Huawei Investment & Holding Co., Ltd., as the parent company, has established multiple subsidiaries via full or controlling ownership, covering various business areas, such as:

Huawei Terminal Co., Ltd., responsible for consumer electronics like smartphones, tablets, wearables, and smart vehicle products.

Huawei Cloud Computing Technology Co., Ltd., providing public, private, and hybrid cloud solutions, with 2024 sales including internal transactions of 68.8 billion yuan, and overseas public cloud revenue growing over 50%.

Huawei Digital Energy Technology Co., Ltd., focusing on energy digitalization and smart photovoltaics, with 2024 sales of 68.678 billion yuan.

HiSilicon Semiconductor Co., Ltd., responsible for chip R&D, with estimated 2024 sales of 30 billion yuan; Kirin chips hold a 12% market share in China’s high-end SoC market.

…

On April 23, 2019, Huawei Investment & Holding Co., Ltd. established a wholly-owned subsidiary, Hubble Technology Investment Co., Ltd., with registered capital of 700 million yuan, 100% owned by Huawei. By the end of 2020, the company had invested in multiple Chinese tech enterprises, over 20 closely related to semiconductor manufacturing, covering equipment, critical materials, design tools, etc. In addition, wafer design companies, RF component, and optical communication parts manufacturers were also investment targets, with equity generally below 10%.

The above Huawei subsidiaries, if more than 50% owned by the parent, will automatically be blacklisted by the U.S. Clearly, attempting to use subsidiaries to evade U.S. sanctions is a long-standing tactic by Chinese companies influenced by the CCP. However, the U.S. government is now closing this loophole.

According to the new rules, if Chinese companies have cross-shareholding among multiple shareholders, the U.S. Commerce Department will apply the strictest standards, preferring “err on the side of caution.” If ownership is unclear, U.S. exporters must verify it themselves and bear responsibility for any oversight. Under such pressure, how willing will U.S. companies be to transact with Chinese companies?

This approach is naturally another heavy blow to the CCP. The Chinese Ministry of Foreign Affairs immediately denounced it as “bullying” and accused the U.S. of “violating international rules”; a spokesperson for China’s Ministry of Commerce stated “firm opposition,” accusing the U.S. of “overgeneralizing national security and abusing export controls,” and claimed that China “will take necessary measures.” China also invoked the Anti-Foreign Sanctions Law, threatening to blacklist U.S. companies.

On the same day the U.S. Commerce Department introduced the new rules, Japan’s Ministry of Economy, Trade and Industry updated its export control “End-User List,” adding several Chinese companies while removing two others. Japan closely followed the U.S. approach, also provoking the CCP’s outrage and protests.

But does the CCP’s shouting, anger, and protesting matter? One can only say that the U.S. strikes are becoming increasingly precise! If the U.S. dares to pull the trigger, would it fear the CCP’s retaliation?

(First published by People’s Daily) △