Summary of Key Points
Recently, China and the United States have almost simultaneously updated their foreign economic regulations: The U.S. has addressed gaps in its chip export controls, requiring permission for any purchase of advanced chips by overseas subsidiaries of Chinese companies, regardless of their location; China has introduced new regulations on outbound investment to prevent the covert outflow of core resources such as technology, data, and talent. Both have adopted a "penetrating regulatory approach" (focusing on the essence rather than the surface), but their objectives are completely opposite—the U.S. aims to hinder China's technological development, while China seeks to protect its own strategic assets.
Detailed Analysis
#### 1. U.S. BIS Chip Guidelines: Plugging Gaps and Closely Monitoring Global Purchases by Chinese-Backed Companies
The U.S. action is essentially a patch for previous regulatory loopholes. In 2025, the U.S. abolished a complex framework called the "AI Diffusion Rule," which was both cumbersome and detrimental to American businesses, allowing Chinese tech companies to purchase advanced chips through subsidiaries in third countries like Malaysia and the UAE. Now, the BIS has made it clear that if the ultimate parent company is Chinese (including those in Macau), permission must be obtained for any purchase of certain advanced chips. This new policy targets future purchases only and does not apply to existing chip inventory, to avoid disrupting global data centers. It indicates a shift from broad-based regulations to more targeted measures aimed at cutting off China's access to advanced chips.
#### 2. China's New Outbound Investment Regulations: Controlling the Flow of Core Resources
The core of China's new regulations is to control the movement of key assets such as technology and data. For example:
- Restrictions on transferring technologies and data that are prohibited from export through investment;
- Even sending personnel abroad for technical guidance is subject to regulation (to prevent companies from moving their AI teams overseas to evade domestic oversight).
Importantly, these regulations are part of a comprehensive strategy that includes the "Anti-Foreign Unreasonable Extraterritorial Jurisdiction Regulations" (effective in April) and the "Blocking Orders" issued in May, as well as recent actions against illegal cross-border financial activities (such as fines on companies like Futu and Tiger). This integrated approach includes:
- Proactive measures to prevent the outflow of core resources through investment reviews;
- Countermeasures: If a country sanctions China, China can restrict that country's operations in China (e.g., by canceling visas);
- Ensuring transparency and control over all cross-border financial flows.
#### 3. Similarities and Differences in Regulatory Approaches between China and the U.S.
- Similarities: Both countries do not let surface-level formalities deceive them. The U.S. examines the ultimate control of subsidiaries, while China focuses on the flow of capital and resources.
- Differences: The U.S. aims to prevent the transfer of advanced technology (chips) to China, whereas China aims to stop the outflow of its own core assets.
- The U.S. focuses on the ownership of companies (whether they are Chinese-backed), while China focuses on the flow of resources.
#### 4. The Difficult Position for Multinational Companies
Multinational corporations, especially those with operations in both China and the U.S., face significant challenges:
- Increased complexity in compliance: For instance, sharing internal technology may be subject to scrutiny by both the U.S. (to determine if the end user is a Chinese company) and China (to verify whether core technologies are being transferred).
- The previously effective use of third-country subsidiaries for regulatory evasion is no longer feasible; both countries can identify the actual controllers or resource flows.
- The cost of non-compliance is substantial: The U.S. can impose heavy fines and arrest executives, while China can deny market access, restrict investments, or even prohibit entry of executives.
#### 5. The New Global Regulatory Landscape
International trade rules used to be governed by organizations like the WTO, but now major powers are using their domestic laws to regulate foreign activities:
- The U.S. uses its BIS regulations to influence chip suppliers worldwide.
- China uses its new outbound investment policies to manage the overseas behavior of its companies and can respond to sanctions with countermeasures.
The key to this competition is not who has the best regulations, but who can enforce them globally. The U.S. relies on market and technological advantages, while China leverages its economic scale and countermeasure capabilities. In the future, power struggles between major countries will increasingly involve the application of domestic laws beyond their territorial boundaries.
In Summary
The simultaneous regulatory adjustments by China and the U.S. reflect a bid to gain control over global technology and resources through "penetrating regulatory approaches." The U.S. seeks to hinder China's technological progress, while China aims to protect its strategic assets. Companies caught in between must learn to navigate these complex regulations with great precision.