The Trump administration in its waning days took one other swipe at China and its largest corporations on Thursday, imposing sanctions on officers and corporations for alleged misdeeds within the South China Sea and imposing an funding ban on 9 extra corporations. The strikes will additional improve tensions with China, Washington’s strategic rival in Asia, days earlier than President-elect Joe Biden takes workplace on Wednesday.
The Biden transition workforce didn’t instantly reply to a request for remark.
Executives of state-owned enterprises, officers of the Chinese Communist Party and navy, together with oil large CNOOC will face new restrictions for allegedly utilizing coercion in opposition to states with rival South China Sea claims.
Senior US officers advised reporters on a name Thursday the brand new CNOOC restrictions is not going to apply to crude oil, refined fuels and liquid pure fuel and don’t apply to present joint ventures with CNOOC that don’t function within the South China Sea.
Nine Chinese corporations have been added to the Pentagon’s listing of corporations with alleged ties to the Chinese navy, together with planemaker Comac and telephone maker Xiaomi Corp.
Those corporations can be topic to a brand new US funding ban which forces American traders to divest holdings of the blacklisted corporations by Nov. 11, 2021.
Shares in Xiaomi slumped over 8% in early Friday buying and selling, in opposition to a 0.2% drop within the Hang Seng index, whereas CNOOC Ltd shares rose round 1%.
China says US exploiting state energy
In its response, the Chinese embassy referred to Jan. 7 Foreign Ministry feedback accusing Washington of “pinning political and ideological labels on economic and trade issues and exploiting its state power to crack down on foreign companies, under the pretext of national security.”
The United States has lengthy opposed China’s in depth territorial claims within the South China Sea, a probably resource-rich space that can be a strategic commerce route.
Washington accuses Beijing of intimidating states comparable to Vietnam and the Philippines which have competing claims there.
China accuses Washington of making an attempt to destabilize the area by sending warships and planes to the South China Sea.
“The United States stands with Southeast Asian claimant states seeking to defend their sovereign rights and interests, consistent with international law,” Secretary of State Mike Pompeo mentioned in saying the sanctions.
Pompeo mentioned Washington was imposing visa restrictions on executives of Chinese state-owned enterprises and officers of the Chinese Communist Party and navy.
He mentioned the sanctions have been directed in opposition to these “responsible for, or complicit in, either the large-scale reclamation, construction, or militarization of disputed outposts in the South China Sea, or use of coercion against Southeast Asian claimants to inhibit their access to offshore resources.”
The restrictions may additionally apply to rapid members of the family, he mentioned.
‘Intimidates China’s neighbours’
The Commerce Department accused CNOOC of harassing and threatening offshore oil and fuel exploration and extraction within the South China Sea, “with the goal of driving up the political risk for interested foreign partners, including Vietnam.”
President Donald Trump’s administration has saved up strain in its ultimate days, focusing on what Washington sees as Beijing’s bid to make use of firms as a way to harness civilian applied sciences for navy functions.
Commerce Secretary Wilbur Ross mentioned CNOOC acted as “a bully for the People’s Liberation Army to intimidate China’s neighbors” and the Chinese navy “continues to benefit from government civil-military fusion policies for malign purposes.”
Ross’s division added CNOOC to an “Entity List” that requires corporations to be granted a particular license earlier than they will obtain exports of high-tech objects from US suppliers.
“Technologies for China’s offshore drilling are mature knowhows and CNOOC has overall very limited exposure to US expertise,” mentioned Chen Weidong, Beijing-based founding father of impartial consultancy DFS Energy and beforehand an offhsore oil veteran. “Company may still need some components and equipment like logging tools from the U.S… but that is not hard to replace and China may need to catch up in manufacturing by itself.”
A second oil govt near CNOOC mentioned the offshore large has more and more turned to personal native corporations for companies and the blacklist additionally may gain advantage engineering and gear suppliers in Europe.
Chinese aviation agency Skyrizon was added to a Military End-User (MEU) List over its capacity to develop navy merchandise together with plane engines, limiting its entry to US exports.
Aside from Comac and Xiaomi, the Pentagon added Advanced Micro-Fabrication Equipment Inc, Luokung Technology Corp, Beijing Zhongguancun Development Investment Center, GOWIN Semiconductor Corp, Grand China Air Co Ltd, Global Tone Communication Technology Co Ltd and China National Aviation Holding Co Ltd to the listing.
Analysts mentioned the selloff in Xiaomi shares is probably going short-term.
“The market reaction is quite intuitive, given US investors have to liquidate their position,” mentioned Kevin Chen, vp at China Merchant Securities. “But I would think this volatility is probably more near-term, because fundamentally right now there is very little change to Xiaomi’s operation,” he mentioned.
Representatives of the Chinese corporations didn’t instantly reply to requests for remark.
But the Trump administration has pulled some punches in opposition to Beijing in its ultimate days, because the Treasury Department has succeeded in easing hardline insurance policies sought by different US companies.
On Wednesday, it scrapped plans to blacklist Chinese tech giants Alibaba, Tencent and Baidu, amid pushback from Treasury Secretary Steven Mnuchin, who’s seen as extra dovish on China, sources mentioned.
On Thursday, Treasury additionally issued a basic license exempting US securities exchanges from the funding ban for transactions with newly blacklisted Chinese corporations. The reprieve lasts a full yr from the date of their addition to the blacklist, however the license doesn’t make clear what occurs after that interval.
