The Trump administration plans to add China’s leading chipmaker SMIC and oil giant CNOOC to a blacklist of alleged companies linked to the Chinese military-industrial complex, escalating tensions with Beijing before President-elect Joe Biden takes office. White House sources familiar with the matter told Reuters about this.
The US Department of Defense is poised to name four more Chinese companies as owned or controlled by the Chinese military, bringing the total to 35. President Trump’s recent decree prevents US investors from buying securities of blacklisted firms next year.
It is not clear when the additions will be published in the federal registry. The list already includes China Construction Technology and China International Engineering Consulting Corp, as well as Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to a document reviewed by Reuters.
SMIC said it continues to “engage in a constructive and open manner with the US government” and that its products and services are for civil and commercial use only. “The company has no relationship with the Chinese military and does not manufacture products for the military or their contractors,” the company said in a statement.
The CNOOC division noted in a released statement that it had checked its parent company and had not yet received formal notification from the relevant US authorities.
When asked about Washington’s planned move, Chinese Foreign Ministry spokeswoman Hua Chunying said Beijing hoped the United States would not erect barriers or obstacles to cooperation or discriminate against Chinese companies.
The US Department of Defense did not respond to a request for comment.
SMIC, which relies heavily on equipment from US suppliers, is already in the spotlight in Washington. In September, the US Commerce Department told some firms that they needed to obtain a license before supplying goods and services to SMIC after they concluded that there was an “unacceptable risk” that the equipment supplied could be used for military purposes.
Last week, Reuters reported that the Trump administration is close to announcing that 89 Chinese aerospace and other companies have ties to China’s military-industrial complex, preventing them from buying a range of American goods and technology.
The list of “Chinese Communist Weapons Companies” was approved in 1999 by the relevant law. It requires the Pentagon to compile a list of companies “owned or controlled” by the People’s Liberation Army of China, but the US Department of Defense did not do so until 2020. Chinese military-industrial complex giants such as Hikvision, China Telecom and China Mobile were added earlier this year.
“Our government reasonably views these firms as puppets of the Chinese government,” Republican Senator Tom Cotton said when asked about the upcoming additions. Cotton, a hardliner on China, called on the US Department of Defense last year to release the list.