Defense Department Blacklists More Chinese Companies

3 mins read

Before transitioning out, the Trump administration is looking to add SMIC, China’s top chipmaker, and CNOOC, the national offshore oil and gas producer, to the blacklist of companies that are accused of being Chinese military.

The ban would restrict the companies’ access to American investors and marks the latest escalation of tensions between Washington and Beijing before President-elect Joe Biden is officially seated as president of the United States.

Earlier this month, the Department of Defense planned to include four additional companies to the list of allegedly Chinese military establishments. Officials did not specify exactly when the new tranche would be published in the Federal Register.

The order is one of many policies that aim to carry out President Donald Trump’s anti-China agenda. The Republican president’s actions would also place incoming Biden into a precarious position with Beijing and Congress.

Washington also aimed to use the banning of Chinese companies to curb Beijing’s influence on American companies with emerging civilian technologies that could be used for military purposes.

Last week, the Trump administration was allegedly close to officially declaring 89 Chinese aerospace and other companies as having ties to the military. The announcement would have stopped them from being able to purchase a large portion of U.S. goods and technology.

Washington had already been monitoring SMIC before the announcement, and in September, the U.S. Commerce Department implemented restrictions on the company. The order banned the firm from certain exports after the agency said there was an “unacceptable risk” that the equipment would be used to benefit China’s military.

A 1999 law required the Pentagon to keep a list of companies that are allegedly controlled or owned by the People’s Liberation Army under the “Communist Chinese Military Companies” list. However, the Department of Defense only began compiling this year and included companies such as Hikvision, China Telecom, and China Mobile.

The White House published an executive order this month that aimed to add policies to the list of companies by restricting them from accessing U.S. investors. The order also banned the firms from selling off their securities starting in November 2021.

Experts believe that the order would not significantly impact the Chinese companies due to its limited scope. They also noted that the uncertainty about the Biden administration’s stance on the matter also plays a crucial role in determining what would happen to the firms, Reuters reported.

However, the move joins other policies at stifling the freedom of Chinese companies and increases tensions between Washington and Beijing. The rift comes amid the coronavirus pandemic and international strain from both sides.

The U.S. Congress and the Trump administration had gone to great lengths to stifle the access of Chinese companies in the U.S. market. The firms are believed to have non-compliance allegations despite the potential hostility from Wall Street.

Danielle Joyce Ong

Danielle is a local journalist with a passion for exploring stories related to crime and politics. When Danielle isn't busy writing or reading, she is usually exploring the great outdoors and all the hiking trails in the Bay.