China on Saturday launched a mechanism that would allow it to sanction foreign companies, upping the ante on a tech war with the United States a day after Washington took steps to curb popular Chinese apps TikTok and WeChat.
China’s long-awaited “list of untrustworthy entities” is seen as a weapon for Beijing to retaliate against the United States, which has used its own “list of entities” to exclude Chinese telecommunications giant Huawei from the US market, while takes action against TikTok WeChat.
Its implementation comes just a day after the US Department of Commerce stepped up pressure by ordering a ban on downloads from the video app TikTok and effectively blocking the use of WeChat, the Chinese super app.
An announcement by the Chinese Ministry of Commerce did not mention any specific foreign entities that could be targeted.
But he said the new system would consider sanctions for entities whose activities “harm China’s national sovereignty, security and development interests” or violate “internationally accepted trade and economic rules.”
That language closely follows the wording Beijing has used to repeatedly denounce US actions against Chinese companies.
Punitive measures may include fines against the foreign entity, prohibiting it from conducting business and investment in China, and restrictions on the entry of personnel or equipment into the country.
It covers “foreign companies, other organizations and individuals,” the ministry said.
‘Unreliable’
According to Friday’s US order against Chinese apps, WeChat, owned by Tencent, would lose functionality in the United States as of Sunday. TikTok users will be prohibited from installing updates, but could continue to access the service until November 12.
That time period potentially allows for a link between TikTok, owned by China’s ByteDance, and an American company to safeguard data from the wildly popular app to allay Washington’s security concerns.
With President Donald Trump facing a tough re-election campaign, US officials have described the measures as essential to safeguarding national security from potential Chinese spying through the platforms.
But in response to the US measures, China’s Commerce Ministry on Saturday condemned what it called US “intimidation,” saying it violated international trade rules and that there was no evidence of any security threat.
“If the United States insists on going its own way, China will take the necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” he said, without specifying potential measures.
Shortly after that statement, the ministry announced the new sanctions regime.
TikTok vowed to fight Trump’s crackdown in court, saying it precludes a tool “for entertainment, self-expression and connection.”
Critics said that while the security risks were unclear, the widespread ban raises concerns about the US government’s ability to regulate free speech.
“It is a mistake to think of this as (only) a sanction on TikTok and WeChat. It is a serious restriction on the First Amendment rights of American citizens and residents,” said Jameel Jaffer, director of the Knight Institute of the First Amendment at Columbia University.
Some analysts say Trump’s moves are motivated more by business competition reasons than security concerns.
The measures would effectively disable US use of WeChat, a purported super application used for messaging, shopping, payments and other services, and TikTok from online marketplaces operated by Apple and Google.
After Sunday, services on WeChat will be “downgraded,” said a senior official with the US Department of Commerce, adding that existing users may retain some capacity.
WeChat is widely used among Chinese expats to keep in touch with people at home. A court challenge to the ban is pending from US-based WeChat users.
The US ban on WeChat does not affect its service in China, where the app is widely used.
Pressure grows for a deal
Current TikTok users will be able to continue using the app until November 12, when it would also face a total ban on its operations in the United States if no deal is reached, according to officials.
The TikTok brand of short, quirky phone videos has become hugely popular, especially among young people, with 100 million users in the US alone.
The move increases pressure on ByteDance to conclude a deal to sell all or part of TikTok to allay US security concerns.
A possible deal would allow Silicon Valley giant Oracle to become TikTok’s technology partner, but some US lawmakers have opposed allowing ByteDance to keep a stake.
Trump said Friday that a deal could be reached quickly.
“For ByteDance, their back is against the wall to accept the terms of the deals outlined in recent days,” said Daniel Ives of Wedbush Securities in a research note.
“We still believe that an agreement can be reached and that this closure can be avoided, although there are 48 critical hours for the negotiations of the agreement between all the parties involved.”
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