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Trump administration set to release list of 89 Chinese aerospace companies and others that could not access U.S. tech exports due to military ties, Reuters reported, a move that could escalate tensions as the Biden administration prepares to take over.
A spokesperson for the US Department of Commerce declined to comment, Reuters said. Commercial Aircraft Corp. of China Ltd., or Comac, and Aviation Industry Corp. of China Ltd. is one of the companies named, Reuters reported, citing a draft US Department of Commerce list.
Such a statement would prevent companies from buying American products and technology, Reuters said.
The move could fuel already heightened tensions between the United States and China on fronts ranging from trade and Taiwan to handling the coronavirus as President-elect Joe Biden prepares to succeed Donald Trump.
AVIC is a public conglomerate with over 100 subsidiaries and over 450,000 employees. In June, the Trump administration put AVIC on a list of companies it said were controlled or owned by the China People’s Liberation Army. The company also runs a civilian business that manufactures airliners and private jets – some built with parts made by joint ventures with U.S. companies.
State-owned Comac is making alternatives Boeing Co. and Airbus SE and now deliver them to major Chinese carriers. The company produces a single-aisle model designed to compete with the Boeing 737 and Airbus A320 and is in the early stages of development of a widebody aircraft. AVIC is a shareholder of the aircraft manufacturer.
In its latest forecast for the commercial aviation market in China, Boeing said the country’s airlines are expected to purchase 8,600 new planes over the next 20 years for a total of $ 1.4 trillion.
A particularly risky business is General Electric Co., a supplier of Comac. For its C919 narrow-body aircraft currently under test, Comac uses engines from CFM International, 50/50 joint venture between General Electric and France Safran SA.
Trump intervened in February to thwart efforts by Chinese hawks to stop the sale of these engines, Bloomberg News reported. “We don’t want to make it impossible to do business with us,” he said in a tweet. “It will only mean that the orders will go elsewhere.”
GE also has exposure through Aviage Systems, its 50/50 joint venture with AVIC. The C919 has Equipment manufactured by Aviage such as flight recording, flight management and on-board maintenance systems.
The US list comes after Trump signed an order earlier this month banning US investments in Chinese companies owned or controlled by the military, as he increased pressure on Beijing in his final months in office.
The United States Securities and Exchange Commission is push forward a plan that threatens to fire Chinese companies from U.S. stock exchanges, Bloomberg reported last week, with the intention of proposing a settlement by the end of the year that would lead to companies being delisted for non-compliance US audit rules.
Reuters too reported Sunday that a senior US military officer who oversees intelligence gathering for the Indo-Pacific Command paid an unannounced visit to Taiwan, a move that risks escalating tensions between Washington and Beijing.
– With the help of Iain Marlow and Anurag Kotoky
(Updates with more context.)
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