China\u2019s escalating conflict with the US over trade is now extending to the drones that have become a vital part of Ukraine\u2019s defense.<\/p>\n\n\n\n
Manufacturers in China recently began limiting sales to the US and Europe of key components used to build unmanned aerial vehicles, according to multiple people with knowledge of the developments, who asked not to be identified discussing sensitive information.<\/p>\n\n\n\n
The moves are a prelude to broader export restrictions on drone parts that western officials expect Beijing to enforce in the new year, the people said. Those rules could take the form of license approvals based on the intended use of the components or softer requirements for Chinese companies to notify the government of their shipment plans, according to one of the people.<\/p>\n\n\n\n
Representatives for China\u2019s Ministry of Commerce and Ministry of Industry and Information Technology did not respond to a request for comment.<\/p>\n\n\n\n
The trade conflict has ratcheted up this month, with Washington slapping fresh curbs on the sale of high-bandwidth memory chips and additional semiconductor gear to China. In response, Beijing banned the sale of dual-use items to the American military and several materials with high-tech and military applications to US companies. The measures, weeks before Donald Trump returns to the presidency with a tough-on-China agenda, have sent prices spiking and upended trade flows as manufacturers sought alternative supplies.<\/p>\n\n\n\n
Beijing\u2019s response asserts for the first time that the trade restrictions apply to Chinese goods \u2014 or goods with Chinese parts \u2014 sold by vendors in and outside of the country, signaling an attempt to replicate the extraterritorial reach of US and European sanctions.<\/p>\n\n\n\n
Drone Curbs
The limits on shipments of drone components have impacted both US and European companies, according to the people. Chinese producers of motors, batteries and flight controllers have capped the quantities they deliver or stopped shipments altogether, they said.<\/p>\n\n\n\n
\u201cI hear a story like that every two or three days,\u201d said Lorenz Meier, chief executive officer of Auterion, a firm that provides software for drones, including those deployed to Ukraine. \u201cI\u2019m sure it will escalate over time to new restrictions.\u201d<\/p>\n\n\n\n
Read More: China Dials Up US Trade Tension With Tit-for-Tat Metals Ban<\/p>\n\n\n\n
In October, China placed sanctions on three US firms that supply to the American military and ten senior defense officials, citing the Pentagon\u2019s plans to provide assistance to Taiwan. On Dec. 5, China added another 13 US companies to its sanction list for similar reasons.<\/p>\n\n\n\n
That new group includes Shield AI Inc., a startup that makes autonomous aircraft designed to operate without GPS or remote pilots. The company has been active in Ukraine, where drones are pivotal to the ongoing war.<\/p>\n\n\n\n
On the day those sanctions were implemented, Shield AI announced a new partnership with Palantir Technologies Inc. to produce military aircraft. Brandon Tseng, Shield AI\u2019s CEO, told Bloomberg News the sanctions would have little impact on his company and demonstrated that the US is developing a \u201cstrong deterrence\u201d that could prevent a major conflict related to Taiwan.<\/p>\n\n\n\n
Taiwan Ties
Taiwan has also formed ties with European countries around drone technologies. Its foreign minister led a delegation to discuss the topic in Lithuania last month, Bloomberg News reported earlier.<\/p>\n\n\n\n
A spokesperson for the European Commission\u2019s trade department didn\u2019t reply to a request for comment.<\/p>\n\n\n\n
Drone developers in Europe are shifting supply chains to outside of China, according to James Earl, a former UK military pilot who has started multiple drone companies.<\/p>\n\n\n\n
\u201cBuying Chinese drone parts is no longer an acceptable thing to do in the West,\u201d Earl said. \u201cThe Chinese restrictions are just part of a process that was already underway.\u201d<\/p>\n\n\n\n
Read More: AI Startup Helsing Is Now Making Attack Drones For Europe<\/p>\n\n\n\n
Western nations are pushing to build and assemble drones outside of China to secure their supply chains. Yet the country remains the hub for producing cheap equipment for the devices. China controls nearly 80% of the commercial drone market, according to a report from the Center for Strategic and International Studies.<\/p>\n\n\n\n
Many producers of UAVs in Ukraine rely on Chinese parts to make the cheap and effective weapons that have helped define the war with Russia. China in July announced a ban on exports of drones for military use, and Beijing says it doesn\u2019t provide weapons to any of the parties in the conflict.<\/p>\n\n\n\n
US Tracking
Multiple US government agencies are tracking the issue, people familiar with the matter said. The Departments of State and Commerce have contacted \u2014 or plan to contact \u2014 affected US companies, according to the people, and are working on sourcing alternate supplies of brushless motors, batteries and magnets.<\/p>\n\n\n\n
The US Department of Defense, meanwhile, has blacklisted Chinese drone manufacturers that the Pentagon believes have ties to China\u2019s military. That includes Shenzen\u2019s SZ DJI Technology Co., the world\u2019s largest consumer drone maker, which is suing the Pentagon for adding it to the list.<\/p>\n\n\n\n
European officials have said that Chinese companies are developing attack drones for Russia, Bloomberg News reported in July. A Chinese official said at the time that the country doesn\u2019t provide weapons for the Ukraine conflict and strictly controls the export of dual-use goods.<\/p>\n\n\n\n
The US is \u201cdeeply concerned\u201d by China\u2019s support of the Russian defense industry and its transfer of components used for attack drones, according to State Department\u2019s acting Head of the Office of Sanctions Coordination Tom West.<\/p>\n\n\n\n
\u201cThe PRC outpaces every country in the world in these exports, fueling Russia\u2019s wanton destruction of Ukraine\u2019s civilian infrastructure and endless attacks on innocent Ukrainian civilians,\u201d West said in a statement this weekend, referring to the People\u2019s Republic of China.<\/p>\n\n\n\n
A spokesperson for the Commerce Department declined to comment. On Saturday, the Pentagon committed an additional $988 million to Ukraine in military support, which includes unmanned aerial systems.<\/p>\n\n\n\n
The Chinese export restrictions could spur a wave of competition from suppliers in Korea, Japan or elsewhere, said Keegan McBride, a researcher at the Oxford Internet Institute who studies tech policy. He believes Beijing\u2019s leadership is fully aware of this reality.<\/p>\n\n\n\n
\u201cIt\u2019s certainly a calculated decision,\u201d he said. \u201cHow hard they push on that, or how strictly they enforce it, will be a pretty clear mechanism for understanding how serious they are.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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