US adds China’s minimum wage and CNOOC to defense blacklist

WASHINGTON (Reuters) – The Trump administration on Thursday added China’s leading chipmaker, SMIC, and oil giant CNOOC, to a blacklist of alleged Chinese military companies, drawing condemnation from Beijing as President-elect Joe Biden is preparing to take up his duties.

The Defense Ministry has designated a total of four additional companies as owned or controlled by the Chinese military, including China Construction Technology Co Ltd and China International Engineering Consulting Corp.

The move, first reported by Reuters on Sunday, brings the total number of blacklisted companies to 35. Although the list did not initially trigger any sanctions, a recent executive order from Republican President Donald Trump will prevent U.S. investors from buying the securities of the companies from the end of next year.

In Beijing, a spokeswoman for the Foreign Ministry said China opposes US efforts to shut down its companies, adding that Washington’s measures go against the principles of market competition. .

“The United States should stop abusing national power and national security concepts to suppress foreign companies,” Hua Chunying said during a regular press briefing on Friday.

In a stock market statement, SMIC said it strongly opposed the move, which reflected a fundamental misunderstanding by the U.S. administration about the end uses of its business and technology.

The company also said its addition to the list did not have a major impact. Its Hong Kong shares closed down 5.4% on Friday after resuming trading in the afternoon following a suspension.

CNOOC Ltd, the listed arm of China National Offshore Oil Corp (CNOOC), said in a discussion paper that it is assessing the impact of the situation on the group and will closely monitor relevant follow-up developments.

Shares of CNOOC Ltd had fallen nearly 14% percent after Sunday’s report and 3.9% as the market closed on Friday.

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 expanded blacklist is seen as part of an attempt to solidify Trump’s legacy against China and place Biden, the Democratic president-elect who takes office on January 20, in hardline positions on Beijing in the midst of ‘anti-Chinese bipartisan sentiment in Congress.

The measure 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.

The list of “Communist Chinese Military Companies” was mandated by a 1999 law requiring the Pentagon to compile a catalog of companies “owned or controlled” by the People’s Liberation Army, but the DOD only compiled it. 2020.

Giants like Hikvision, China Telecom and China Mobile were added this year.

In November, the White House issued an executive order, first reported by Reuters, that aimed to give the list bite by banning U.S. investors from buying company securities, from November 2021.

The major U.S. asset managers, Vanguard Group and BlackRock Inc, each own around 1% of the shares of CNOOC listed unit, CNOOC Ltd, and together hold around 4% of the outstanding shares of the SMIC, according to reports.

Both Congress and the Trump administration have increasingly sought to restrict 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.

The U.S. House of Representatives passed a law on Wednesday to expel Chinese companies from U.S. stock exchanges if they do not fully comply with the country’s audit rules, giving Trump one more tool to threaten Beijing before stepping down. .