Documents released by Congress on October 21 showed that despite being on a U.S trade blacklist, suppliers to Chinese telecoms giant Huawei and China’s top chipmaker SMIC got billions of dollars worth of licenses from November through April to sell their goods and technology.
The documents, first obtained by Reuters, showed that 113 export licenses worth $61 billion were approved for suppliers to ship products to Huawei (HWT.UL). Also, another 188 licenses valued at nearly $42 billion were approved for Semiconductor Manufacturing International Corp (SMIC) (0981.HK).
The data also showed that over the same period, more than 9 out of 10 license applications were granted to SMIC suppliers while 69% of requests to ship to Huawei were approved.
On October 21, the U.S. House of Representatives Foreign Affairs Committee voted to grant a request by its top Republican member Michael McCaul to release the licensing data, which it received from the Commerce Department in May.
China hawks in Washington, who have made a concerted effort to deprive Chinese companies of access to advanced U.S. technology, were enraged by these numbers.
“It is just another example of President Biden not taking the economic and security threat posed by the Chinese Communist Party seriously.”
In a statement, McCaul highlighted:
“It’s clearly in our national interest to increase transparency and public scrutiny on how our nation transfers its technology to an adversary.”
The release of an “arbitrary snapshot” of license approvals, however, “risks politicizing the licensing process and misrepresenting the national security determinations” made by the government, according to the Commerce Department.
Approved license applications do not represent actual shipments and around half of all licenses are used. Additionally, license applications involving Huawei and SMIC are processed under policies developed by the Trump administration and maintained by the Biden administration, as explained further by the Commerce Department.
A former senior Commerce Department official in the Trump administration, while echoing the agency’s view, declined to be named. He commented:
“This very small period of license activity is not an accurate window into the Huawei and SMIC license process.”
He also noted that the goal of preventing the companies from obtaining leading-edge technology without unnecessarily harming U.S. exports of other goods had been successful. He added:
“This [document release] seems designed to mislead people and generate headlines.”
Huawei declined to comment, while SMIC did not respond to a request for comment.
After Huawei was placed on a trade blacklist in May 2019 over national security concerns by the Trump administration, its U.S. suppliers and others were compelled to acquire a special license to ship goods to it. With fears coming up that it could divert advanced technology to military users, SMIC was added to the so-called entity list in December 2021.
Most of the licenses granted did not authorize shipments of sensitive items. Since Huawei was blacklisted, 80 of the 113 licenses that were approved during the period were for non-sensitive goods that only required a license. For SMIC, the figure was 121 of 188.
Licenses are generally valid for four years.
During the Trump administration, $87 billion worth of licenses for Huawei were approved after it was blacklisted, reports emerged earlier this year.