The Trump administration blacklisted China’s top chipmaker SMIC and oil giant CNOOC on Thursday. This is likely to exacerbate tensions with Beijing before President-elect Joe Biden takes office.
The Ministry of Defense named a total of four other companies owned or controlled by the Chinese military, including China Construction Technology and China International Engineering Consulting.
The move, first reported by Reuters on Sunday, puts the total number of companies on the blacklist of 35. While the list originally didn’t trigger any penalties, a recent executive order issued by Republican President Donald Trump will prevent US investors from selling securities of the blacklist to buy companies from the end of next year.
The Chinese Embassy in Washington referred Reuters to earlier statements made by its State Department spokesman that “China strongly opposes the politicization of relevant Chinese companies”.
The China National Offshore Oil Corp (CNOOC) did not immediately respond to a request for comment.
SMIC said in a stock exchange statement that it is reviewing the implications of listing it and that investors should be aware of the investment risks. SMIC shares were down over 2 percent on Friday before trading in the company’s Hong Kong shares ceased, while CNOOC was down 0.7 percent early this morning.
The shares of the listed CNOOC unit CNOOC had fallen by almost 14 percent according to the Sunday report.
SMIC, which relies heavily on equipment from US suppliers, was already in Washington’s crosshairs. In September, the US Department of Commerce announced that some companies would need a license before they could supply goods and services to SMIC after they concluded that there was an “unacceptable risk” that the equipment shipped to SMIC was could be used for military purposes.
The expanded blacklist is seen as part of an offer to cement Trump’s tough legacy in China and put Biden, the Democratic president-elect, who will take office on Jan. 20, into a tough position in Beijing amid bipartisan anti- Chinese sentiment in Congress.
The move is also part of a broader effort by Washington to target Beijing’s efforts to persuade companies to use emerging civilian technologies for military purposes.
The list of “Chinese Communist 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. However, the DOD did not comply with them until 2020. Giants like Hikvision, China Telecom, and China Mobile were added earlier this year.
In November, the White House released an ordinance, first reported by Reuters, that sought to give teeth to the list by banning US investors from buying stocks of blacklisted companies from November 2021.
The leading US asset managers Vanguard Group and BlackRock each own approximately 1 percent of the shares of the listed CNOOC unit CNOOC and together approximately 4 percent of the outstanding shares of SMIC.
Congress and the Trump administration have increasingly tried to curb US market access by Chinese companies that fail to obey the rules of American rivals, even if it means fighting Wall Street.
On Wednesday, the US House of Representatives passed a law to kick Chinese companies from US exchanges if they fail to fully comply with the country’s auditing rules. This gives Trump another tool with which he can threaten Beijing before leaving office.
© Thomson Reuters 2020
The iPhone 12 Pro series is amazing, but why is it so expensive in India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts, Google Podcasts, or RSS, Download the episodeor just hit the play button below.
Source link : https://gadgets.ndtv.com/laptops/news/smic-added-to-us-defence-blacklist-chinese-military-companies-donald-trump-administration-joe-biden-2334044#rss-gadgets-all