Trump adds China's SMIC and CNOOC to defense blacklist

The administration of US President Donald Trump has added China’s main chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies.

The Department of Defense on Thursday designated a total of four more companies it claims are owned or controlled by the Chinese military, including China Construction Technology Co. Ltd and China International Engineering Consulting Corp.

The move, which is likely to escalate tensions with China, brings the total number of companies blacklisted to 35.

US to add 33 Chinese companies to economic blacklist

The US has decided to add 33 Chinese firms and institutions to an economic blacklist over alleged human rights violations or having ties with China’s military.

Although the list did not initially trigger any penalties, a recent executive order issued by President Donald Trump will preclude American investors from buying securities of the blacklisted firms beginning late next year.

Shares of CNOOC’s listed unit CNOOC Ltd fell by nearly 14 percent after the move, which curbs the Chinese companies’ access to US investors, was first reported by Reuters on Sunday.

SMIC had said it continued “to engage constructively and openly with the US government,” asserting its products and services were solely for civilian and commercial use.

“The Company has no relationship with the Chinese military and does not manufacture for any military end-users or end-uses,” it added.

The company, which relies heavily on equipment from American suppliers, was already in the US’ crosshairs. In September, the US Commerce Department notified some companies that they need to have a license before they can supply goods and services to SMIC after claiming there was an “unacceptable risk” that equipment provided could be employed for military purposes.

The new move is seen as part of a broader attempt by the US to hamper what it claims to be Beijing’s efforts to enlist companies to utilize emerging civilian technologies for military purposes.

This comes a day after the US House passed a bill that would block Chinese firms from American markets over accounting rules.

The bill cleared on a voice vote could bar many Chinese companies from listing shares on US exchanges or otherwise raising money from American investors.

China says will take all necessary measures to protect rights of its firms

‘China will take all necessary measures to resolutely protect the legitimate rights and interests of Chinese firms.’

Also, Reuters reported last week that the Trump administration was to declare that 89 Chinese aerospace and other firms have military ties, constraining them from buying a range of US goods and technology.

The Trump administration’s new decision might aggravate the already strained relations between the world’s two economic powers.

The US and China are currently at loggerheads over a host of issues, including trade, a new security law introduced in Hong Kong, the origins and handling of the COVID-19 disease, Taiwan, and the disputed South China Sea.

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