Exclusive: Trump to add Chinese minimum wage and CNOOC to defense blacklist – sources

WASHINGTON (Reuters) – The Trump administration is set to add China’s leading chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies, document and sources say , which will restrict their access to US investors and worsen tensions with Beijing a few weeks before President-elect Joe Biden takes office

Reuters reported earlier this month that the Department of Defense (DOD) plans to designate four more Chinese companies as owned or controlled by the Chinese military, bringing the number of Chinese companies affected to 35. A recent executive order issued by President Donald Trump will prevent U.S. investors from purchasing securities of listed companies from the end of next year.

It was not immediately clear when the new installment would be published in the Federal Register. But the list includes 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.

The SMIC said it continued “to engage constructively and openly with the US government” and that its products and services are for civilian and commercial use only. “The company has no relationship with the Chinese military and does not manufacture for military end users or end uses.”

The DOD, the Chinese Embassy in Washington and the CNOOC did not immediately respond to requests for comment.

The minimum wage, which depends heavily on equipment from American suppliers, was already in Washington’s sights. In September, the US Department of Commerce informed some companies that they needed to obtain a license before supplying goods and services to the SMIC after concluding that there was an “unacceptable risk” that the equipment supplied to it could be used. for military purposes.

The upcoming move, coupled with similar policies, is seen as aimed at consolidating the tough Chinese legacy of outgoing Republican President Donald Trump and putting new Democrat Biden in sweeping positions on Beijing amid bipartisan sentiment anti-Chinese in Congress. The Biden campaign declined to comment.

The list is also part of a larger 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 was on the verge of declaring that 89 Chinese aerospace companies and other firms had military ties, preventing them from purchasing a range of American products and technologies.

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

This month, the White House issued an executive order, first reported by Reuters, that sought to give the list bite by banning U.S. investors from purchasing securities of blacklisted companies from November. 2021.

The directive is unlikely to deal a big blow to businesses, experts have said, due to its limited scope, uncertainty over the Biden administration’s position and the already limited holdings of U.S. funds.

Yet, combined with other measures, it is deepening a rift between Washington and Beijing, already at odds over China’s handling of the coronavirus and its crackdown on Hong Kong.

Congress and the administration have increasingly sought to curb access to the U.S. market for Chinese companies that do not comply with the rules facing their U.S. rivals, even if that means opposing Wall Street.