China Tightens Tech Export Rules Amid TikTok Talks
August 29 2020 - 12:02PM
Dow Jones News
By Eva Xiao and Liza Lin
China announced new restrictions on artificial-intelligence
technology exports that could further complicate the sale of
TikTok's U.S. operations, while intensifying the tech battle
between the world's two largest economies.
The new restrictions, unveiled Friday by China's ministries in
charge of commerce and science and technology, cover such computing
and data-processing technologies as text analysis, content
recommendation, speech modeling and voice-recognition.
Technologies on the list can't be exported without a license
from local commerce authorities.
The new restrictions could throw a wrench into talks between
Chinese tech firm Bytedance Ltd. and potential buyers, as the owner
of TikTok faces pressure from the White House to quickly sell the
popular short-video app's U.S. operations or face an effective
ban.
On Saturday, China's official Xinhua News Agency quoted a
government trade adviser as saying that ByteDance should study the
new export list and "seriously and cautiously" consider whether or
not it should halt its sales negotiations.
ByteDance owes its success internationally to China's domestic
technology prowess and providing updated algorithms to firms
overseas is a form of technology export, the adviser -- University
of International Business and Economics professor Cui Fan -- told
Xinhua. That means that no matter who is the new operator of
ByteDance's international business, there likely will be some
cross-border technology transfer, he said.
Neither Bytedance nor China's Ministry of Commerce replied to
requests for comment on the new restrictions.
Microsoft Corp., Walmart Inc. and Oracle Corp. have all
expressed interest in the breakout app, the success of which rests
on addictive video feeds powered by Bytedance's AI-driven
content-recommendation engine.
The updated list of banned and restricted technology exports,
which spans agriculture, pharmaceutical and other industries, also
specified new restrictions on laser technology, cryptography, chip
design and other high-tech categories.
China last made changes to its technology export list in 2008,
the Commerce Ministry said in a statement posted on the Chinese
government's website. It said adjusting the list was imperative,
given the rapid development of science and technology and China's
"continuous improvement" in industrial competitiveness.
Technology is increasingly central to the geopolitical clash
between the U.S. and China. In addition to TikTok, the White House
has also targeted a growing number of Chinese tech firms, namely
telecom giant Huawei Technologies Co. and Tencent Holdings.
Over the past two years, the U.S. government has c ampaigned to
blacklist Huawei's 5G technology globally -- with increasing
effectiveness -- citing security risks associated with its ties to
the Chinese government. The Trump administration has also curbed
Huawei's access to foreign-made chips, squeezing its ability to
source parts.
Tencent's messaging app WeChat, which serves as a crucial bridge
between U.S. businesses and the Chinese market, faces the same
effective ban as the TikTok app, on national-security grounds.
In the past year, the U.S. government has also imposed strict
restrictions on Chinese companies and individuals buying American
technology. Dozens have been put on a U.S. Commerce Department
blacklist since October. They can't purchase certain technologies
without a license, with the Trump administration citing
human-rights abuses in the far-western Chinese region of Xinjiang
and other national-security concerns.
Write to Eva Xiao at eva.xiao@wsj.com and Liza Lin at
Liza.Lin@wsj.com
(END) Dow Jones Newswires
August 29, 2020 11:47 ET (15:47 GMT)
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