Logo of China's Huawei. Reuters Yonhap News.

The U.S. government is moving to block Chinese companies on its "blacklist"—which prohibits the import of sensitive U.S. technologies—from circumventing restrictions through their subsidiaries.

On the 29th (local time), the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced that firms majority-owned (50% or more) by entities on the export control list would also be subject to U.S. Department of Commerce building. AP Yonhap News. restrictions. Previously, even if a company was a subsidiary of an entity under export controls, it was exempt if the subsidiary itself was not explicitly listed.

This loophole allowed companies designated for export controls, such as China's Huawei, to establish new subsidiaries and import sensitive technologies through them.

The new regulation also imposes a duty of care on exporters to ensure they do not violate export control rules when exporting sensitive technology to companies in which a listed entity holds a "substantial minority stake" or maintains a "significant relationship."

The Department of Commerce maintains a list of foreign companies and institutions that could pose a threat to national security, requiring government approval—or effectively banning—the export of dual-use technologies that could be diverted for military purposes.

This regulation applies to affiliates of companies listed on the "Entity List," which includes firms involved in activities contrary to U.S. national security or foreign policy interests, and the "Military End-User List," which targets entities that may use technology for military purposes.

Thea D. Rozman Kendler, Assistant Secretary of Commerce for Export Administration, stated, "For too long, [regulatory] loopholes have enabled exports that undermine U.S. national security and foreign policy interests. Under this administration, BIS is closing those gaps and ensuring that our export controls operate as intended."

The new regulation will be officially published in the Federal Register on the 30th and will take effect 60 days thereafter.

The U.S. has been aggressively expanding export controls to prevent China from securing advanced technologies that could be used for military purposes, and many analysts view this measure as also being aimed at China.

However, it is also possible that companies from third countries, such as South Korea, that establish joint ventures with Chinese firms on the export control list could be affected.

The Wall Street Journal (WSJ) reported that while this measure could impact thousands of companies worldwide, most industry executives see China's technology sector as the primary target.

Chinese companies like Huawei have numerous subsidiaries and global business partners, making it difficult for the U.S. to completely block the supply of U.S. technology.

The WSJ reported that Trump administration officials are particularly concerned about the potential for U.S. technology to aid Chinese firms due to the ongoing AI competition between the U.S. and China.

These measures could affect ongoing trade negotiations between the U.S. and China.

According to Reuters, the Chinese Ministry of Commerce expressed "strong opposition" to the U.S. action in a statement that day, declaring that it would take necessary measures to protect the legitimate rights and interests of Chinese companies.

The Chinese Ministry of Commerce urged the U.S. to immediately correct its wrongdoings and cease its "unreasonable suppression of Chinese enterprises."

Yonhap News