New US rules restricting usage of Chinese IT to impact 4.5 million companies: Report

The move would affect up to 4.5 million businesses, Nikkei Asia reported.

| Updated on: Apr 18 2021, 13:40 IST
Representational image.
Representational image. (Unsplash)
Representational image.
Representational image. (Unsplash)

The companies operating in America will have to ask permission from the US government to use information technology equipment and services from China or other countries deemed "adversaries" from May.

The move would affect up to 4.5 million businesses, Nikkei Asia reported.

The regulations, which were put in place in March, let Washington review such corporate purchases or usage of technology and block any transactions deemed too risky, with an aim of preventing leaks of sensitive information.

The rules apply to a broad swath of technology, including hardware and software used in critical infrastructure and telecommunications networks, as well as artificial intelligence and quantum computing technology. The list also covers services that handle personal information, along with monitoring equipment such as internet-enabled surveillance cameras, sensors and drones.

The rules affect all private-sector companies operating in America. Three-quarters of the roughly 6 million companies in the US use foreign technology, the Commerce Department estimates, including the American branches of overseas businesses, according to Nikkei Asia.

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The United States Commerce Department is preparing to offer licenses or pre-clearance to reduce the burden on businesses.

Washington has restricted dealings with Chinese tech enterprises before.

Last year, the country barred bids for government contracts by companies that use technology from five Chinese businesses including Huawei Technologies, ZTE and surveillance camera maker Hikvision. However, the new approach is far more expansive.

It targets companies from countries designated as "foreign adversaries" -- China, Russia, North Korea, Iran, Venezuela and Cuba.

Chinese corporations are expected to form the bulk of those under tighter rules.

Businesses will need to submit information on any problematic IT gear or services to ensure they do not pose an "undue or unacceptable risk."

Companies have the right to object to the results of a review or take steps to reduce risks to a more acceptable level. But those that do not abide by a ban or a mitigation agreement could face civil or criminal penalties.

The Commerce Department issued subpoenas to Chinese companies in mid-March and on Tuesday, demanding information on their US operations to "support the review of transactions."

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First Published Date: 18 Apr, 13:40 IST