WASHINGTON: The Trump administration is poised to add China’s top chip maker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, according to a document and sources, limiting their access to US investors and the Tensions with Beijing are increasing weeks before. President-elect Joe Biden takes office.
Reuters reported earlier this month that the Ministry of Defense planned to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the number of Chinese companies affected to 35.
It was not immediately clear when the new installment would be published in the federal register. But the list includes China Construction Technology and China International Engineering Consulting Corp, in addition to Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to the document and three sources.
The Defense Department did not respond to a request for comment.
The move, coupled with a similar policy, is seen as an attempt to bolster outgoing Republican President Donald Trump’s stubborn legacy and put incoming Democrat Biden in tough positions in Beijing amid dual anti-China sentiment in the Congres.
The list is also part of a broader Washington effort to focus on what it sees as Beijing’s efforts to enlist companies to use emerging civilian technologies for military purposes.
Reuters reported last week that the Trump administration is about to declare that 89 Chinese aerospace and other companies have military ties, preventing them from buying a range of US goods and technology.
SMIC was already in Washington’s crosshairs. In September, the US Department of Commerce imposed restrictions on exports to the company after it concluded that there was an “unacceptable risk” that the equipment supplied to the company could be used for military purposes.
The list of ‘Communist Chinese Military Companies’ was mandated by a 1999 law requiring the Pentagon to compile a catalog of companies ‘owned or controlled’ by the People’s Liberation Army, but the Ministry of Defense was not compliant until 2020. Giants such as Hikvision, China Telecom and China Mobile were added earlier this year.
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This month, the White House released an executive injunction, first reported by Reuters, seeking to give the list teeth by banning U.S. investors from buying securities of the blacklisted companies from November 2021.
The directive is unlikely to seriously hit companies, experts said, due to its limited scope, uncertainty over the Biden administration’s position and already scarce holdings of US funds.
Still, coupled with other measures, it deepens a rift between Washington and Beijing, which is already at odds with the coronavirus and China’s crackdown on Hong Kong.
Congress and the government have increasingly sought to curb entry into the US market for Chinese companies that do not abide by the rules facing US rivals, even if it means thwarting Wall Street.