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WASHINGTON: The Trump administration is ready to add China’s top chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of suspected Chinese military companies, according to a document and sources, curbing their access to US investors and increased tensions with Beijing weeks earlier. President-elect Joe Biden takes office.
Reuters reported earlier this month that the Defense Department planned to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the number of affected Chinese companies to 35.
It was not immediately clear when the new tranche 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, along with similar policies, is seen as seeking to cement outgoing Republican President Donald Trump’s tough legacy with China and box incoming Democrat Biden in tough positions on Beijing amid bipartisan anti-China sentiment in Congress.
The list is also part of a broader effort by Washington to target what it sees as Beijing’s efforts to recruit corporations to harness emerging civilian technologies for military purposes.
Reuters reported last week that the Trump administration is close to declaring that 89 Chinese aerospace and other companies have military ties, preventing them from buying a variety of American products and technology.
SMIC was already in Washington’s sights. In September, the United States Department of Commerce placed export restrictions on the company after concluding that there was an “unacceptable risk” that the equipment supplied to it could be used for military purposes.
The list of “Communist Chinese Military Companies” was mandated by a 1999 law that requires the Pentagon to compile a catalog of companies “owned or controlled” by the People’s Liberation Army, but the Defense Department only complied in 2020. Giants like Hikvision, China Telecom, and China Mobile were added earlier this year.
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This month, the White House issued an executive order, first reported by Reuters, that sought to strengthen the list by prohibiting US investors from buying securities of blacklisted companies starting in November 2021.
The directive is unlikely to deal a serious blow to companies, experts said, due to its limited scope, uncertainty about the Biden administration’s stance and already slim holdings of US funds.
Still, combined with other measures, it deepens the rift between Washington and Beijing, which are already at odds over the coronavirus and China’s crackdown on Hong Kong.
Congress and the administration have increasingly sought to curb access to the US market for Chinese companies that fail to abide by the rules facing US rivals, even if that means antagonizing Wall Street.
