U.S. Commerce Department Imposes Strict Export Controls on Chinese Quantum Leader QuantumCTek

Insider Brief

• The U.S. Department of Commerce has announced a round of new stringent export controls and QuantumCTek Co., Ltd. made the list.
• This move is part of an updated supplement to the Export Administration Regulations, due to heightened concerns over potential misuse of advanced technologies.
• Several of QuantumCTek subsidiaries or aliases were also listed on the new document.

The U.S. Department of Commerce has announced stringent export controls on QuantumCTek Co., Ltd., one of China’s most prominent quantum startups that specializes in quantum communication technologies. This move is part of an updated supplement to the Export Administration Regulations (EAR), reflecting heightened concerns over national security and the potential misuse of advanced technologies, including the possibility of use or misuse by the Chinese military.

QuantumCTek, operates under several subsidiaries — or aliases — including HKUST National Shield Quantum Technology Co., Ltd., and Anhui Quantum Communication Technology Co., Ltd., which have also been added to the Entity List, is a register maintained by the U.S. Department of Commerce that includes foreign organizations, businesses, and individuals subject to specific export control restrictions.

This designation requires a license for any exports, reexports, or in-country transfers of items subject to the EAR when QuantumCTek participates in the the transaction. QuantumCTek was just one of the companies listed on the document.

The inclusion of QuantumCTek, which is based in China’s Anhui Province, in the Entity List is a critical step in preventing the transfer of sensitive technologies that could potentially be used to enhance foreign military capabilities. The Department of Commerce has imposed a presumption of denial on all items subject to the EAR, which would effectively restrict QuantumCTek’s access to U.S. technology and products. This action underscores the U.S. government’s commitment to safeguarding its technological edge and national security interests.

According to the company website, QuantumCTek Co.was established in 2009 as a spinout of one of the world’s quantum leaders, University of Science and Technology of China, which is also a pioneer in the commercialization for quantum information technology.  QuantumCTek provides products & services for quantum secure communication, quantum computing and quantum measuring, according to the site.

“In 2020, QuantumCTek went public on SSE STAR MARKET (Stock Code 688027) as the first A-share listed company specialized in quantum technology as its core business,” the website adds.

The SSE STAR Market (Science and Technology Innovation Board) is a stock exchange segment of the Shanghai Stock Exchange (SSE) in China, launched in 2019.

Most recently, China’s latest 504-qubit superconducting quantum computing chip, named “Xiaohong,” was delivered to QuantumCTek Co., Ltd. The chip was developed by Center for Excellence in Quantum Information and Quantum Physics, affiliated with the Chinese Academy of Sciences (CAS).

Background on Export Controls and Entity List Updates

The Entity List, which is periodically reviewed and updated, identifies entities subject to specific license requirements for transactions involving controlled items. These updates are part of broader efforts to control the dissemination of technologies that may pose a risk to U.S. national security and foreign policy objectives, according toThe U.S. Department of Commerce’s the Bureau of Industry and Security.

In addition to QuantumCTek, the latest update to the Entity List includes Shanghai QuantumCTek Co., Ltd., another key player in the quantum technology sector. Also known as Shanghai Guodun Quantum Information Technology Co., Ltd., this entity faces similar restrictions, reflecting the comprehensive nature of the U.S. regulatory approach.

The Bureau of Industry and Security (BIS) plays a pivotal role in maintaining these controls. Entities listed are subject to rigorous licensing requirements as specified in Section 748.5(c) through (f) of the EAR. Moreover, Section 744.11 provides additional context for licensing requirements related to standards-related activities, emphasizing the broad scope of these regulations.

Strategic Implications

The addition of QuantumCTek and related entities to the Entity List highlights the strategic significance of controlling advanced technologies such as quantum computing.

By restricting access to U.S. technology, the Department of Commerce aims to mitigate the risk of these technologies being leveraged in ways that could undermine U.S. security and competitive advantage.