Relations between the world's two largest economies have soured sharply since the ongoing tariff war.
The Trump administration on Thursday announced that it would sharply restrict exports of civilian nuclear technology to China, alleging that it has been trying to illicitly acquire sensitive American technologies.
"The United States cannot ignore the national security implications of China's efforts to obtain nuclear technology outside of established processes of the US-China civil nuclear cooperation," Secretary of Energy Rick Perry said after his department announced the measures on Thursday.
These national security measures are results of a US government policy review prompted by concerns regarding China's efforts to obtain nuclear material, equipment, and advanced technology from US companies.
The policy guidance establishes a clear framework for disposition of authorisation requests for transfers to China that are currently on hold because of military diversion and proliferation concerns.
As per the new policy, there will be a presumption of denial for new licence applications or extensions to existing authorisations related to the China General Nuclear Power Group, which is currently under indictment for conspiring to steal US nuclear technology.
"For decades, China has maintained a concerted, central government-run strategy to gain nuclear advantage," a senior administration official told reporters during a conference call.
These efforts are necessary to strike an appropriate balance between the long-term risk to US national security and economic interests, as well as the immediate impact to the US nuclear industrial base, the Department of Energy said.
China is "actively pursuing our advanced nuclear technology for diversion to military use in its third-generation nuclear power submarine, in the development of a nuclear-powered aircraft carrier and in strategic dual-use nuclear-powered platforms, such as small modular reactors and floating nuclear power plants deployable in the South China Sea," the official said.
The official alleged that China was already using nuclear power on man-made islands it created in the South China Sea. "We know that they are developing platforms for use on these islands and for nuclear-powered icebreakers, also floating nuclear power plants, which give the potential for rapid deployment to any platform that it could be tethered to," the official said.
In 2017, China imported nuclear technology worth USD 170 million from the US. The administration "carefully weighed" the economic impact, the official said.
"We understand the US industry may suffer in the short term. We believe that in the long term, this policy will benefit the US and protect the American nuclear industry," the official asserted.
The move appeared to be part of a more concerted effort by the administration to put new pressure on China beyond the tariffs that President Trump has announced on Chinese goods.
Former president Barack Obama in 2015 signed off on an extension of nuclear cooperation between the United States and China, with his administration arguing that Beijing had moved to tighten controls as part of renewal negotiations.
Relations between the world's two largest economies have soured sharply since the ongoing tariff war.
"They lived too well for too long and, frankly, I guess they think that the Americans are stupid people. Americans are not stupid people," Trump said in an interview on "Fox and Friends."
The mogul-turned-president boasted that his tariffs had already "had a big impact."
"Their economy has gone down very substantially," he said. "I have a lot more to do if I want to do it. I don't want to do it but they have to come to the table."
Trump is pressing China to improve trading conditions for US products and to end what US businesses say is widespread theft of their intellectual property.
China has responded by imposing counter tariffs, which the Trump administration alleges show political interference by targeting products from key states in next month's congressional elections.
The International Monetary Fund this week cited the trade war as it lowered its 2019 growth forecast for China, which is set to see its slowest expansion since 1990. The IMF also lowered estimates for the United States and the global economy as a whole.
Trump renewed his charge that past presidents Obama and George W. Bush "let China get out of control" through the massive US imports of manufactured goods.
"We have helped rebuild China more than any other factor. We have helped rebuild it. I said it's over", he said.
The new policy goes into immediate effect, and sets guidelines for reviewing all existing and future technology transfers into China, but the vast majority of existing technology transfers approved before January 1, 2018 are unlikely to be altered.
