Both US and Chinese export control systems have both produced multiple innovations (extraterritorial jurisdiction, informal letters, trading of controls, rare earth restrictions), but the fundamental record of effectiveness of these tools on chips and AI has not yet been discussed and should inform the need for reform.

China's innovation progress has historically not been done in isolation; globalization has been critical for talent, funding, and market opportunities, and when China talks about self-reliance, they really mean wanting to be at the top of the food chain where others depend on them more than they depend on others, not autarky.

The foreign direct product rule represents a key US innovation in asserting extraterritorial jurisdiction over allied and other nations' technologies when those technologies are based on or derived from American tools or manufacturing equipment.

China has developed technological strengths in critical minerals and other areas and has since 2020 quickly moved up the learning curve on how to implement export controls as an offensive and defensive tool, mirroring US approaches.

Both the US and China are now in a tit-for-tat escalation spiral with export controls that is corrupting the original export control system and making it function like any other geopolitical tool rather than a security-focused mechanism.

At the Beijing Auto Show, Chinese car makers demonstrated improving battery and range technologies, impressive car designs, and significant presence with large crowds, while foreign players (VW, Honda, Ford, Buick) showed they had gotten competitive models, indicating significant technological competition across all sides.

Many Chinese auto companies are not making profits despite technological competitiveness, due to excess capacity and inventory issues hurting company bottom lines.

Meta/Manus deal was actually completed with money and technology already transferred, so attempting to 'unwind' it would require forgetting technologies already learned—making the Chinese termination announcement essentially symbolic rather than operationally reversible.

Chinese innovation in pharmaceuticals has followed a clear progression from providing raw chemical inputs (APIs) and contract manufacturing to conducting clinical trials to developing and marketing genuinely innovative drugs globally, demonstrating capability for frontier innovation.

The Meta-Manus deal killed by China raises questions about whether China has decided to pull up the drawbridge and prevent its technology from leaving its control, or whether it is a short-term reaction to US-China relations and a summit bargaining chip.

Export controls were originally designed as non-negotiable tools to prevent weapons of mass destruction and other harmful weapons from falling into the hands of terrorists and adversaries, but have been expanded to cover broader digital technologies with dual-use capabilities.

Scott Kennedy recommends eliminating the bargaining of export controls for market access or other concessions and ensuring that policy is based on solid evidence about items, end users, or other factors.

Informal letters (isinformed letters) from the US government to semiconductor producers have become a mechanism to quickly push manufacturers to restrict their technology use to specific potential customers, representing a significant innovation in export control enforcement during the Biden administration.

China continues to be a two-track economy with macro slowdown and weak consumption alongside continued technological progress, new Chinese AI models, and impressive AI diffusion across industries.

Scott recommends better coordination with allies on dual-use technologies, noting that allies have their own regulatory systems and views, and that without sustainable collaboration, export controls will not be implementable.