President Trump to add China’s SMIC and CNOOC to defence blacklist

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The Trump administration is poised to include China's leading chipmaker SMIC and federal offshore gas and oil producer CNOOC into a blacklist of alleged Chinese military companies, according to a record and sources, curbing their access to US investors and escalating tensions with Beijing.

Reuters reported earlier this month that the Department of Defence was intending to designate four Chinese firms as owned or controlled by the Chinese army, bringing the number of Chinese firms affected to 35. A recent executive order issued by President Donald Trump would stop US investors from buying securities of the listed businesses beginning late next year.

It was not immediately apparent when the new tranche, would be printed in the Federal Register. However, the list comprises China Construction Technology Co Ltd 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.

SMIC said it continued "to engage constructively and openly with the US government" and its products and services were exclusively 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."

SMIC, which is based heavily on equipment from US suppliers, was in Washington's crosshairs. Back in September, the US Commerce Department advised some firms that they will need to acquire a license prior to providing products and services to SMIC after concluding there was an "unacceptable risk" that equipment provided to it may be used for military purposes.

The upcoming movement, coupled with similar policies, is seen as seeking to cement incoming Republican President Donald Trump's tough-on-China heritage and also to box incoming Democrat Biden into hard-line positions on Beijing amid bipartisan anti-China opinion in Congress.

The list is also part of a broader effort by Washington to target what it sees as Beijing's attempts 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, restricting them by purchasing a range of US goods and technologies.

The list of "Communist Chinese Military Companies" was falsified by a 1999 law requiring the Pentagon to compile a catalogue of businesses "owned or controlled" by the People's Liberation Army, but DOD just surfaced in 2020. Giants such as Hikvision, China Telecom and China Mobile were inserted earlier this year.

This month, the White House released an executive order, first reported by our news agency partners Reuters, that sought to give teeth to the record by prohibiting US investors from purchasing securities of those blacklisted companies from November 2021.

The directive is not likely to deal the companies a critical setback, specialists said, due to the limited scope, doubt about the stance of their Biden administration and already-scant holdings by US funds.

Still, along with other measures, it deepens a rift between Washington and Beijing, currently at loggerheads over the China's handling of this coronavirus and its crackdown on Hong Kong.

Congress and the government have sought increasingly to curtail the US market access of Chinese businesses that do not comply with rules confronted by American rivals, even if this implies antagonizing Wall Street.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Alexandra Alper Humeyra Pamuk. Writing by Alexandra Alper. Additional Reporting by Mike Stone in Washington and Josh Horwitz in Shanghai. Editing by Marguerita Choy and Christopher Cushing.

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