The Trump administration on Thursday added China’s prime chipmaker, SMIC, and oil large CNOOC to a blacklist of alleged Chinese language navy corporations, a transfer prone to escalate tensions with Beijing earlier than President-elect Joe Biden takes workplace.
The Division of Protection designated a complete of 4 extra corporations as owned or managed by the Chinese language navy, additionally together with China Building Expertise and China Worldwide Engineering Consulting.
The transfer, first reported by Reuters on Sunday, brings the overall variety of corporations blacklisted to 35. Whereas the record didn’t initially set off any penalties, a current govt order issued by Republican President Donald Trump will stop US buyers from shopping for securities of the blacklisted companies beginning late subsequent 12 months.
The Chinese language Embassy in Washington referred Reuters to prior remarks made by its Overseas Ministry spokesperson that “China firmly opposes the politicisation of the related Chinese language corporations.”
China Nationwide Offshore Oil Corp (CNOOC) didn’t reply instantly to a request for remark.
SMIC stated in a inventory market assertion that it was assessing the influence of its addition to the record and stated buyers ought to pay attention to the funding dangers. SMIC shares declined by over 2 p.c on Friday earlier than buying and selling within the firm’s Hong Kong shares was suspended, whereas CNOOC slipped 0.7 p.c in early morning commerce.
Shares of CNOOC’s listed unit CNOOC had fallen by practically 14 p.c following the Sunday report.
SMIC, which depends closely on gear from US suppliers, was already in Washington’s crosshairs. In September, the US Commerce Division knowledgeable some companies they wanted to acquire a license earlier than supplying items and providers to SMIC after concluding there was an “unacceptable threat” that gear provided to it might be used for navy functions.
The expanded blacklist is seen as a part of a bid to cement Trump’s tough-on-China legacy and to field Biden, the Democratic president-elect who takes workplace on January 20, into hardline positions on Beijing amid bipartisan anti-China sentiment in Congress.
The measure can also be a part of a broader effort by Washington to focus on what it sees as Beijing’s efforts to enlist firms to harness rising civilian applied sciences for navy functions.
The record of “Communist Chinese language Navy Corporations” was mandated by a 1999 legislation requiring the Pentagon to compile a catalog of corporations “owned or managed” by the Individuals’s Liberation Military, however the DOD solely complied it in 2020. Giants like Hikvision, China Telecom and China Cell had been added earlier this 12 months.
In November, the White Home revealed an govt order, first reported by Reuters, that sought to offer tooth to the record by prohibiting US buyers from shopping for securities of the blacklisted corporations from November 2021.
High US asset managers Vanguard Group and BlackRock every personal about 1 p.c of shares of CNOOC’s listed unit CNOOC, and collectively personal roughly 4 p.c of excellent shares of SMIC, disclosures present.
Congress and the Trump administration have sought more and more to curb the US market entry of Chinese language corporations that don’t adjust to guidelines confronted by American rivals, even when meaning antagonising Wall Road.
On Wednesday, the US Home of Representatives handed a legislation to kick Chinese language corporations off US inventory exchanges if they don’t totally adjust to the nation’s auditing guidelines, giving Trump yet one more instrument to threaten Beijing with earlier than leaving workplace.
© Thomson Reuters 2020
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