Asia equities tumbled Monday dragged down by a drop in Chinese chip stocks after the U.S. unveiled new export rules last week. Hong Kong’s Hang Seng Index and its Tech Index lost 2.95% and 3.46%, respectively, while the Shanghai Composite Index lost 1.66%.
Chinese Tech and Semiconductor Stocks Down as U.S. Announces Major Export Policy Shift
The stock markets in Asia are down Monday after Chinese tech and chipmaker equities declined on the new export rules by the U.S. Department of Commerce. The drop sent Hong Kong’s Hang Seng Index tumbling by 2.92%, while Hang Seng Tech Index and the Shanghai Composite fell by 3.46% and 1.66%, respectively.
Shares of Chinese internet giants Alibaba and Tencent were also down as investors rotated away from Asian stocks, spooked by fresh U.S. export measures focused on slowing down China’s technological and military developments.
The Bureau of Industry and Security introduced a myriad of export measures on Oct. 7, one of which is aimed at depriving China of some semiconductors produced with U.S. equipment. The new measures could turn out to be one of the biggest changes in U.S. policy toward tech exports to China, which has become a global superpower in recent years.
“As I told Congress in July, my north star at BIS is to ensure that we are appropriately doing
everything in our power to protect our national security and prevent sensitive technologies with
military applications from being acquired by the People’s Republic of China’s military,
intelligence, and security services.”Alan Estavez, Under Secretary of Commerce for Industry and Security
U.S. and China Now Officially in an “Economic War”, Experts Say
Analysts believe the shift will have a significant impact on China’s attempts to build its own semiconductor empire and promote commercial and state research on military developments, artificial intelligence (AI), data centers, and other areas that use top-notch chips. The experts think Chinese chipmakers will be the first to feel the impact of the policy shift.
Dylan Patel, head analyst at SemiAnalysis, said U.S. and China are now officially in an “economic war.” There is “no possibility of reconciliation” any longer, he added.
The regulatory changes come just months after the two most powerful countries in the world reached a landmark preliminary agreement that would prevent over 200 Chinese companies from being delisted in the U.S. This marks another major blow to China, which has already experienced a notable economic slowdown in 2022.
This article originally appeared on The Tokenist
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