Washington’s latest addition of 31 Chinese companies, including a key supercomputing facility in Shanghai, to its export blacklist has thrust the next-generation computing technology into the center of Sino-U.S. rivalry. The Biden administration restricted exports to Shanghai Supercomputing Technology Co – an enterprise jointly backed by the Shanghai Supercomputer Center (SSC) and Chinese supercomputer maker Dawning Information Industry – accusing it of “acquiring and attempting to acquire” U.S.-origin items to support China’s military modernization. “This entity has supported the operation of supercomputers located in the People’s Republic of China, specifically by offering cloud-based supercomputing capabilities to support hypersonics research,” the Bureau of Industry and Security under the U.S. Department of Commerce said in a statement.
The Chinese company’s activities were “contrary to U.S. national security and foreign policy interests”, the Agency said. Chinese Foreign Ministry Spokesman Wang Wenbin characterized the U.S. move as “hysteria” and a weaponization of economic and trade issues, adding that Beijing will “take necessary measures” to protect the country’s interests. Supercomputers, which are capable of performing a massive number of calculations in seconds, are useful in the development of military systems such as missile defense and nuclear weapons.
“Supercomputing centers have been at the forefront of the U.S.-China tech war,” said Zhang Xiaorong, Director of Chinese research institute Shendu Technology. “The vast majority of China’s supercomputers use American chips and software.” The SSC is a municipal-level facility that belongs to the middle echelons of China’s supercomputing centers, second to national-level centers, according to Zhang. Its subsidiary, Shanghai Supercomputing, is based in the Lingang New Area. Part of a free-trade zone, the area has been tasked by local authorities with creating a “multi-computing-power supply system” that can generate more than CNY10 billion in industry value by 2025. SSC is at the core of China’s computing power strategy, and plays an important role in national defense, scientific and technological innovation, and economic development.
While the new U.S. sanctions are expected to affect, to a certain degree, the supply of computing power in Shanghai and nearby regions, as well as the sanctioned entity’s collaboration with American firms, substantial and industry-wide damages, like those seen in the Chinese semiconductor industry, are unlikely because China has already established independent innovation capabilities and market competition in its computing center industry.
Founded in 2000 with funding from the Shanghai government, the SSC aims to support the city’s transformation into a digital economy by setting up a “public computing power service platform” that provides both supercomputing and intelligent computing. The center has business deals with leading US technology companies, including Microsoft, Nvidia, AMD and Intel. The latest sanctions come as renewed interest in artificial intelligence, sparked by OpenAI’s ChatGPT, fuels surging demand for computing power. China's Eastern Data and Western Computing project, which aims to build data hubs and computing centers in key areas in western and eastern China, is designed to “optimize the allocation of existing computing power resources”, said Chen Jia, Researcher at Renmin University of China, as reported by the South China Morning Post.
Meanwhile, the European Union has narrowed the list of mainland China- and Hong Kong-based firms it plans to sanction for funneling banned European goods to the Russian military. Three companies remain on a draft sanctions list, down from an initial eight, although the final number is not set in stone. The measures are part of the 11th package of sanctions to punish Russia for its invasion of Ukraine. Five Chinese firms were tentatively removed from the list after talks with Chinese diplomats in Brussels. The Chinese side said it would work to ensure those businesses stop reselling hi-tech goods made in Europe to Russia. The three remaining businesses were found to be Russian entities operating in China and will be kept on the list. Two EU diplomats said the arrangement can be seen as a test of whether China is acting in good faith.
