Could China’s export controls on military-related tech and materials backfire?

The restrictions affect several countries, including major export destinations the United States, France, Germany and Brazil.

The move, which analysts said was not a surprise, was primarily aimed at the US and its allies, given China’s foreign trade dynamics since last year, according to Zhou Chao, a research fellow for the geopolitical strategy programme at Anbound, an international think tank.

“It is evident that this move targets the United States and other Western countries. Many products under export controls involve Europe and the United States,” Zhou said.

“The decoupling of the defence industry from China is a very firm demand of the US. China’s latest export control measures will also accelerate the decoupling process of the military industries.”

But the impact would be limited as the US and its allies have already taken measures to reduce reliance on China’s supply chain, even at the cost of higher inflation, he added.

Since last year, the Biden administration has announced nearly 1,000 sanctions and trade restrictions against Chinese companies, citing concerns over national security, Xinjiang, and Russia’s invasion of Ukraine.

Tao Jingzhou, an international arbitrator with Arbitration Chambers in Beijing and Paris, said decoupling between the US and China is a “two-way street.”

“Although the impacted products are rather limited, it shows that the Chinese government will resort to such practices to restrict exports of sensitive products.”

Last July, Beijing imposed export controls on some drones and drone-related equipment.

China has been under intense pressure from the US and the European Union to stop supplying dual-use products that supply the Russian forces in Ukraine. Beijing has denied the accusations and has insisted it has maintained normal trade relations with Moscow.

“[They may be aimed] at reducing suspicion and forestalling US sanctions, and perhaps also aimed at some [Chinese] companies at home, warning them not to spoil their country for their dirty profits,” he said.

Beijing said on Thursday that its latest controls showed China’s responsible approach to prevent proliferation.

Song Zhongping, a Chinese military commentator and former People’s Liberation Army instructor, said China has maintained real-time control over the exports of sensitive technologies, particularly in the fields of aerospace and shipbuilding, since they were often sensitive military or dual-use items.

“China has always pursued peace and does not wish to see conflicts continually spread. This has been our fundamental intention, so this move is not surprising at all,” he said.

Zhu Feng, executive dean of Nanjing University’s School of International Studies, said the restrictions primarily reflected the current state of technological competition between Beijing and Washington.

“This is expected as we see the US has intensified its crackdown on China’s high-end technology and [in return] China has to increasingly guard its own technologies,” he said.

Cutting-edge technologies have become the frontline in a US-China rivalry that has seen increased US-led sanctions.

In response, China has raised security awareness in key product areas – those with military applications or other military value – and it may reciprocate with restrictions on the US, Zhu said.

However, experts warned that the measures could backfire on China as tensions escalated with the US and the EU.

Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis, said the US had “many more chop points” on China, including possible restrictions against China’s access to US aviation products.

The move is “only going to accelerate the decoupling, and the more China shows it is going to retaliate, then more countries will worry and the US can decouple. And they would decouple [from China],” she said.

Additional reporting by Orange Wang