TAKING ON CHINA AND THE THREAT
THAT EXISTS.
THE U.S. COMMERCE DEPARTMENT
ANNOUNCING THIS MORNING THAT IT
IS ADDING SEMICONDUCTING
MANUFACTURING AND THE LIST OF
COMPANIES THAT ARE BLACKLISTED
FROM EXPORTING U.S. TECHNOLOGY
AND THE COMPANY IS THE LARGEST
CHIP MAKER IN CHINA, 60 OTHER
COMPANIES WILL ALSO BE ADDED TO
THIS BLACKLIST OVER TIES TO THE
CHINESE MILITARY, JOINING ME
RIGHT NOW IN AN EXCLUSIVE
INTERVIEW THE COMMERCE SECRETARY
HIMSELF, COMMERCE SECRETARY
WILBUR ROSS JOINING US ON THE
CHINA THREAT.
MR. SECRETARY, GOOD TO SEE YOU
THIS MORNING.
THANK YOU VERY MUCH FOR JOINING
US.
TELL US ABOUT THE COMPANIES AND
WHY WE SHOULD BE UNDERSTANDING
THE TIES TO THE MILITARY,
SECRETARY?
FIST LET’S START THERE SORT OF
FROM 30,000 FEET.
SECRETARY: SURE, WELL, THERE’S
77 NAMES THAT HAVE BEEN PUT ON
THE LIST OF WHICH 11 ARE RELATED
TO SEMICONDUCTOR MANUFACTURING
INTERNATIONAL CORP.
49 ARE OTHER CHINESE AND 17 ARE
FROM COUNTRIES OTHER THAN CHINA
ALSO FOR SIMILAR NATIONAL
DEFENSE REASON.
THIS BRINGS THE GRAND TOTAL ON
THE ENTITY LIST TO 689 COMPANIES
OF WHICH 296 ARE CHINESE AND 150
OF THOSE ARE RELATED TO HAUWEI,
THE BIG 5G COMPANY.
WHAT THIS IS ALL ABOUT IS THESE
ARE COMPANIES THAT ARE TIED TO
THE PEOPLE’S LIBERATION ARMY,
SMIC IS THE LARGEST
SEMICONDUCTOR MANUFACTURER IN
CHINA AND A VERY, VERY BIG
COMPANY AT THAT.
IT IS NOT CUTTING INFORMATION
TECHNOLOGY, MOSTLY VERY LARGE
NANOMETER DIMENSIONS AND
NANOMETER DIMENSIONS TELL YOU
HOW ADVANCED THE TECHNOLOGY IS
SO WE’VE MADE A CUT OFF AT TEN
NANOMETERS.
ANYTHING AT TEN OR BELOW WILL BE
ON THE BAND LIST, ANYTHING ABOVE
TEN WHICH IS A LOT OF SMIC MAKES
ANYWAY WILL BE OKAY FOR THEM TO
DO BECAUSE THEY ARE NOT
MILITARILY VERY SENSITIVE.
NOW A NANOMETER PROBABLY --
MARIA: SECRETARY, WE SHOULD
POINT OUT THAT THE CHINESE
COMMUNIST PARTY HAS BEEN VERY
CLEAR WITH ITS MOTIVES, THEY
WANT TO RETURN CHINA TO BEING
THE NUMBER 1 SUPER POWER
MILITARILY, TECHNOLOGICALLY AND
THAT WOULD BE OVERTAKING THE
UNITED STATES.
MANY OF THE COMPANIES THAT
YOU’RE REFERRING TO ARE ENABLING
TO DO THAT, WHETHER IT’D BE
PRODUCING MILITARY EQUIPMENT,
VISION, USING THE VIDEO
TECHNOLOGY TO TRACK THE UIGHURS
AND OTHER RELIGIOUS MINORITIES
BUT APPARENTLY THE JOURNAL THIS
MORNING IS REPORTING ABOUT THE
PUSHBACK FROM THE TREASURY THAT
TREASURY SECRETARY STEVEN
MNUCHIN IS TRYING TO PUSH BACK
ON THE EXECUTIVE ORDER THAT THE
PRESIDENT HAS PUT IN PLACE,
MAYBE REMOVE SUBSIDIARIES OF THE
COMPANIES AND NOT SIT
SUBSIDIARIESES ON THE BLACKLIST
SO THAT INVESTORS CAN STILL
INVEST HERE.
WE KNOW THAT THE MSCI AS WELL AS
FT HAVE -- HAVE TAKEN OUT THESE
COMPANIES FROM THEIR INDEXES.
CAN YOU TELL US WHY THE TREASURY
IS TRYING TO WATER DOWN THE
PRESIDENT’S EXECUTIVE ORDER?
SECRETARY: WELL, YOU WOULD HAVE
TO ASK TREASURY THEMSELVES.
THE PURPOSE OF THE PRESIDENT’S
EXECUTIVE ORDER WAS TO BAN
AMERICAN INSTITUTIONS AND
INDIVIDUALS FROM TRADING IN
THOSE SECURITIES BEGINNING SOME
TIME NEXT YEAR.
SO THAT IS ONE WAY TO TRY TO PUT
THEM OFF FROM ACCESS TO AMERICAN
CAPITAL.
WE THINK IT WOULD BE VERY
STRANGE TO LET AMERICAN CAPITAL
FUND TECHNOLOGICAL BREAKTHROUGHS
THAT WILL HELP THE PEOPLE’S
LIBERATION ARMY.
THAT’S REALLY THE UNDERLYING
WILLINGIC TO IT.
MARIA: SO WHAT IS THE NEWS THIS
MORNING, SECRETARY?
WILL THE PRESIDENT STAY FIRM
WITH THIS EXECUTIVE ORDER OR ARE
WE GOING TO SEE CHANGES IN TERMS
OF THE SUBSIDIARIES OF SOME OF
THOSE CHINESE COMPANIES?
SECRETARY: WELL, THIS -- THIS
ACTION THAT WE TOOK DOES PUT 11
AFFILIATES OF SMIC ON TO THE
ENTITY LIST.
THIS HAS NOTHING TO DO WITH THE
TRADING.
THIS WAS AN ACTION TAKEN BY DOD.
WHAT THIS HAS TO DO IS THEIR
ACCESS TO VERY ADVANCED
SEMICONDUCTOR PRODUCTS.
THE SMALLER OF NUMBER OF
NANOMETERS INSIDE, THE MORE
POWER IS AVAILABLE FOR OTHER
THINGS.
SO IT’S VERY IMPORTANT TO GET TO
SMALLER SIZE.
PEOPLE LIKE TAIWAN SEMICONDUCTOR
AND SAMSUNG ARE DOWN AROUND
7 NANOMETERS.
OUR CUT OFF HERE IS AT 10
BECAUSE AT 10 YOU CAN MODIFY THE
EQUIPMENT TO MAKE THEM DOWN AS
SMALL AS 7.
MARIA: SECRETARY, I GUESS THE
BIGGER QUESTION HERE IS ARE WE
GOING TO SEE A CHANGE ON THE
POLICY OF CHINA WITH AN INCOMING
ADMINISTRATION.
THIS ADMINISTRATION, YOURSELF
INCLUDED HAVE IDENTIFIED THE
THREAT OF CHINA AND IDENTIFIED
THE THREAT OF CHINA TRYING TO
OVERTAKE THE UNITED STATES AND
IN DOING SO, YOU HAVE ALSO BEEN
TOUGH ON -- ON CHINA THROUGH
TARIFFS, SANCTIONS,
PROSECUTIONS, ET CETERA, AND
THIS BLACKLIST BANNING PEOPLE
FROM INVESTING AND -- AND
FUNDING CHINA’S EXPANSION.
DO YOU BELIEVE THAT THESE --
THESE THINGS WILL BE HARD TO
OVERTURN OR DO YOU BELIEVE THAT
WE ARE GOING THE SEE AN
ADMINISTRATION COME IN WITH
SOMEONE FRIENDLY TO CHINA LIKE
AMBASSADOR TO CHINA BEING BOB
IGER POTENTIALLY AND AN
ADMINISTRATION THAT SEES CHINA
DIFFERENTLY?
DO YOU BELIEVE THAT IT WOULD BE
EASY FOR A BIDEN ADMINISTRATION
TO OVERTURN EVERYTHING YOU AND
YOUR COLLEAGUES HAVE PUT IN
PLACE?
SECRETARY: WELL, ANYTHING DONE
BY EXECUTIVE ORDER PRESUMABLY
COULD BE REVOKED BY A SUBSEQUENT
EXECUTIVE ORDER AND ACTIONS
TAKEN BY OUR DEPARTMENT COULD BE
CHANGED GOING FORWARD.
FOR EXAMPLE, WE HAVE PUT THEM ON
THE LIST THIS MORNING, THE SMIC
WITH THE PRESUMPTION OF DENIAL
IF SOMEONE APPLIES FOR A
LICENSE.
A NEW ADMINISTRATION COULD
CHANGE THAT BUT I WOULD BE VERY
SURPRISED GIVEN THE HUNTER BIDEN
CONTROVERSY, I WOULD BE VERY SURPRISED IF THE BIDEN
SURPRISED IF THE BIDEN
ADMINISTRATION COULD BE ALL THAT
LENIENT ON CHINA BUT THE FACT
THAT IT’S A REAL NATIONAL
SECURITY RISK IF THEY DID.
MARIA: SURE, SECRETARY, GREAT TO
HAVE YOU THIS MORNING.