By David Shepardson

WASHINGTON (Reuters) – The U.S. government is closely scrutinizing exports to China and last year denied or took no action on a quarter of requests in order to stop sales that would advance Beijing’s militarization, a senior official said in testimony released on Tuesday.

In 2022, 5,064 export and re-export license applications were reviewed and about 26% were denied or returned without action, Commerce Department assistant secretary Thea Rozman Kendler said in written testimony for a Senate Banking Committee hearing on Wednesday.

“We identify sensitive U.S. technologies that would give our adversaries an advantage, develop policies and strategies for protecting these technologies, and review license applications submitted by exporters,” Kendler’s testimony said.

Nearly 700 Chinese parties are subject to the government’s export controls on what is known as the “Entity List,” Assistant Secretary of Commerce for Export Enforcement Matthew Axelrod said in written testimony. More than 200 have been added since the beginning of the Biden administration, he said.

“We leverage our administrative and criminal enforcement, as well as our regulatory authority, to address the diversion of advanced technologies – like semiconductors, marine engines, and satellite and rocket prototypes – that support China’s military modernization efforts,” Axelrod’s testimony said.

The goal is to counter China’s “military modernization, human rights abuses, and other activities contrary to our national security and foreign policy interests,” he said.

The hearing is titled “Countering China: Advancing U.S. National Security, Economic Security, and Foreign Policy”.

The administration’s plans to restrict certain U.S. outbound investments in specific sensitive technologies are still under discussion, said testimony from Treasury Department official Paul Rosen.

“Our desire is to avoid situations in which U.S. investments support and advance technologies that enhance military or intelligence capabilities in countries of concern that could undermine our national security and put Americans at risk,” his testimony said.

Commerce Secretary Gina Raimondo said in March the Biden administration was considering a pilot program to address risks about investment in China.

“There are a lot of U.S. pension funds invested in China and people’s retirement money. You certainly don’t want do anything that has an unintended consequence,” Raimondo said. “You don’t want to be overly broad.”

(Reporting by David Shepardson and Karen Freifeld; Editing by Chris Reese and Sonali Paul)

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