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US closes loophole for importing sanctions chips to China via Macau.

Published: 2023-01-18

The Macau Special Administrative Region of China can no longer be used as a loophole for importing technology and goods into China that are subject to US export restrictions. Previously, advanced chips and not only were supplied to the Celestial Empire in this way.

Previously, US technology sanctions excluded Macau from requirements aimed at preventing the export of semiconductor and computer technologies, which the US government believes can be used to modernize China's military-industrial complex and violate human rights.

The Bureau of Industry and Security (BIS) of the US Department of Commerce has until now treated the Macau Special Administrative Region as a separate territorial entity, and thus was not subject to China's export requirements. However, exporters were advised to exercise due diligence and be aware of these restrictions when shipping to Macau.

But from now on, the updated policy of the Bureau of Industry and Security added Macau to the sanctions list. The reason for the change is "the potential risk of diverting goods subject to export control regulations from Macau to China."

The fears are not unfounded. Smugglers have historically used Macau as an entry point for goods into China. Just last month, a woman faked a pregnancy to smuggle hundreds of processors and iPhones into China and avoid paying import taxes. Macau has been a Special Administrative Region of China since 1999, when Portugal returned it to Chinese administration.

While Macau's defense and foreign relations are the responsibility of Beijing, the territory has some autonomy in economic and commercial relations in accordance with the "one country, two systems" principle. The Macau Special Administrative Region is an open port, a major financial center, known for its casinos, gambling houses, hippodrome, and nightclubs. In September 2021, China unveiled plans to build an economic center in Macau focused on semiconductor manufacturing. The new zone will expand economic opportunities for Macau at a time when the gambling industry is experiencing restrictions due to COVID. In addition, the plan aimed to "promote the interconnection of innovation chains between Hong Kong, Macau and the mainland."

Countries such as the Netherlands objected to additional export restrictions imposed by the US on China. A White House spokeswoman denied reports that the United States is forcing countries to join efforts to limit China's access to technology. “We are not pushing any of our allies or our partners. We consult closely with them and they make their own decisions. And that is how we move forward in our relationship,” said the representative of the White House. And President Biden recently personally discussed this issue with the leaders of Japan and the Netherlands.