WASHINGTON (Reuters) – The United States added dozens of Chinese companies, including the country’s top chipmaker SMIC and Chinese drone manufacturer SZ DJI Technology Co Ltd, to a trade blacklist on Friday as the administration of US President Donald Trump was in its final tensions with China. weeks in office.
Reuters first reported the addition of SMIC and other companies earlier on Friday. The move is seen as the final step in Republican Trump’s efforts to polish his image of stubborn China as part of Washington-Beijing’s protracted battle over trade and numerous economic issues.
The US Department of Commerce said the action against SMIC stems from Beijing’s efforts to use civilian technologies for military purposes and the evidence of activity between SMIC and Chinese military industrial companies of concern.
The Commerce Department will “not allow advanced US technology to help build the army of an increasingly belligerent adversary,” Secretary Wilbur Ross said in a statement.
The department also said it would add the world’s largest drone company DJI to the list, along with AGCU Scientech; China National Scientific Instruments and Materials, and Kuang-Chi Group for enabling so-called “large-scale human rights violations.”
“The United States will use all available countermeasures, including measures to prevent (Chinese) companies and institutions from exploiting US goods and technologies for malicious purposes,” added Secretary of State Mike Pompeo in a separate release.
SMIC and the other companies did not immediately comment.
But some lawyers and industry executives raised questions about the impact of Friday’s action against SMIC. In general, listed companies are required to obtain licenses from the Department of Commerce that are rigorously scrutinized when seeking permission to receive items from US suppliers.
But SMIC will only face a tough standard of assessment if it seeks licenses for highly advanced US chip manufacturing equipment of 10 nanometers or less. Licenses for all other items shipped to the company will be reviewed on a case-by-case basis, the trade department said.
“It’s a nice (public relations) sentence: ‘We’ll put it on this list of bad guys,’ said William Reinsch, a former trade department official, who said he envisions the agency already shipping such technology to SMIC. blocked. “Practically … it doesn’t change anything.”
‘RANDOM SUPPRESSION’
But the Chinese authorities did not mince words about Washington’s latest gamble.
In a speech to the Asia Society on Friday, Chinese State Councilor Wang Yi, who is also the Secretary of State, took note of the growing list of US sanctions and called on Washington to stop “arbitrary repression” of Chinese companies .
China’s State Department said that if true, the blacklist would be evidence of US repression against Chinese companies and that Beijing would continue to take the “necessary steps” to protect their rights.
“We urge the US to stop the wrong behavior of unfounded oppression of foreign companies,” ministry spokesman Wang Wenbin told a regular news conference in Beijing on Friday.
The Ministry of Commerce has released a list of 77 companies and affiliates on the so-called entity list, including 60 Chinese companies.
The designation by the Ministry of Commerce includes some entities in China that are reportedly enabling human rights violations and some that are helping it build and militarize artificial islands in the South China Sea, the agency said.
It also cited entities who purchased items of US origin to support the Chinese military and those involved in the theft of US trade secrets.
Companies previously added to the list include telecom equipment giants Huawei Technologies Co and 150 affiliates, and ZTE Corp for sanctions violations, as well as surveillance camera maker Hikvision on oppression of the Uyghur minority in China.
FRAYING TIRES
Shares in SMIC, formally the Semiconductor Manufacturing International Corp., fell 5.2% in Hong Kong on Friday, while the company’s Shanghai-listed shares fell 1.8%. The benchmark indices in the two markets fell by less than 1%.
SMIC was already in Washington’s crosshairs.
In September, the Department of Commerce mandated that suppliers of certain equipment apply to the company for export licenses after concluding that there was an “unacceptable risk” that the equipment supplied to the company could be used for military purposes.
Last month, the Department of Defense added the company to a separate blacklist of alleged Chinese military companies, effectively banning US investors from buying their shares from the end of next year.
SMIC has repeatedly stated that it has no relationship with the Chinese military.
SMIC is the largest Chinese chip manufacturer but is behind Taiwan Semiconductor Manufacturing Co, the industry leader. It has tried to build foundries to manufacture computer chips that can compete with TSMC’s.
The ties between Washington and Beijing have become increasingly antagonistic over the past year as the world’s two largest economies discussed Beijing’s handling of the coronavirus outbreak, the imposition of a national security law in Hong Kong and mounting tensions in the South. -Chinese Sea.
Reporting by David Shepardson and Alexandra Alper; Additional reporting by Humeyra Pamuk, Mike Stone, Karen Freifeld, Tom Daly Gabriel Crossley, and Tom Westbrook; Written by Humeyra Pamuk, David Shepardson, and Alexandra Alper; Edited by William Mallard, Steve Orlofsky and Jonathan Oatis