Exclusive: Trump to add China SMIC and CNOOC to defense blacklist – sources

WASHINGTON (Reuters) – The Trump administration is poised to add China’s leading chip maker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, according to a document and sources, by restricting their access. to US investors and escalating tensions with Beijing weeks before president-elect Joe Biden takes office.

Reuters reported earlier this month that the Department of Defense was planning to designate four other Chinese companies as owned or controlled by the Chinese military, bringing the number of Chinese companies affected to 35.

It was not immediately clear when the new tranche would be published in the Federal Register. But the list includes China Construction Technology Co Ltd and China International Engineering Consulting Corp, as well as Semiconductor Manufacturing International Corp (SMIC) and China National Offshore Oil Corp (CNOOC), according to the paper and three sources.

The Department of Defense (DOD) did not respond to a request for comment.

The move, along with similar policies, is seen as an attempt to cement the legacy of outgoing Republican President Donald Trump and to frame incoming Democrat Biden in uncompromising positions on Beijing amid anti-Chinese bipartisan sentiment in Congress.

The list is also part of a broader effort by Washington to target what it sees as Beijing’s efforts to enlist companies to exploit emerging civilian technologies for military purposes.

Reuters reported last week that the Trump administration is close to claiming 89 Chinese aerospace companies and other corporations have military ties, preventing them from purchasing a range of US goods and technology.

SMIC was already in Washington’s sights. In September, the US Department of Commerce imposed export restrictions on the company after concluding that there was an “unacceptable risk” that the equipment it supplied could be used for military purposes.

The list of “Communist Chinese Military Companies” was imposed by a 1999 law that required the Pentagon to compile a catalog of companies “owned or controlled” by the People’s Liberation Army, but the DOD only complied in 2020. Giants like Hikvision, China Telecom and China Mobile devices were added earlier this year.

This month, the White House issued an executive order, first reported by Reuters, that sought to dent the list by banning U.S. investors from buying stocks of blacklisted companies since November 2021.

The directive is unlikely to give companies a major blow, experts said, due to its limited scope, uncertainty about the Biden administration’s stance, and already low holdings of US funds.

However, combined with other measures, it deepens a rift between Washington and Beijing, already at loggerheads over the coronavirus and China’s crackdown on Hong Kong.

Congress and the administration have increasingly sought to curb access to the US market by Chinese companies that do not abide by the rules faced by American rivals, even if it means antagonizing Wall Street.