WASHINGTON (Reuters) -The United States added dozens of Chinese companies, including chip maker SMIC and Chinese drone maker SZ DJI Technology Co. Ltd., to Friday’s trade blacklist, while the administration of the U.S. president United States Donald Trump is raising tensions with China in his final weeks in office.
Reuters first reported the incorporation of SMIC and other companies Friday earlier. The move is seen as the latest in Republican Trump’s efforts to burn his tough image against China as part of a long struggle between Washington and Beijing over trade and numerous economic problems.
The U.S. Department of Commerce said the action against SMIC stems from Beijing’s efforts to harness civilian technologies for military purposes and evidence of activities between SMIC and Chinese military industrial companies of concern.
The Commerce Department “will not allow U.S. advanced technology to help build the army of an increasingly belligerent adversary,” Secretary Wilbur Ross said in a statement.
The department also said it was adding the world’s largest DJI drone company to the list along with AGCU Scientech; China’s national scientific instruments and materials and the Kuang-Chi group to allegedly enable “large-scale human rights abuses.”
“The United States will use all available countermeasures, including actions to prevent (Chinese) companies and institutions from exploiting U.S. goods and technologies for malicious purposes,” Secretary of State Mike Pompeo added in a separate statement.
SMIC and the other companies did not comment immediately.
But some lawyers and industry executives raised questions about the impact of Friday’s move against SMIC. In general, companies registered with the entities are required to apply for licenses from the Department of Commerce that undergo rigorous scrutiny when applying for permission to receive items from U.S. suppliers.
But SMIC will only face a difficult revision standard when applying for licenses for highly advanced U.S. chip manufacturing equipment at 10 nanometers or less. The licenses for the remaining items shipped to the company will be reviewed on a case-by-case basis, the Commerce Department said.
“It’s a good (public relations) line: ‘We’re putting it on this list of bad guys,'” said William Reinsch, a former Commerce Department official who said he imagined the agency was already blocking shipments of this technology to SMIC. “As a practical matter … nothing changes.”
“ARBITRARY SUPPRESSION”
But Chinese authorities did not say a word about Washington’s latest gambit.
China’s Minister of State Wang Yi, who is also the country’s foreign minister, on Friday addressed the speech to the Asian Society, which noted the extensive list of U.S. sanctions and called on Washington to stop their “arbitrary suppression” of Chinese companies.
China’s Foreign Ministry said that, if true, the blacklist would be evidence of US oppression of Chinese companies and that Beijing would continue to take “the necessary steps” to protect its rights.
“We urge the U.S. to stop its misbehavior of unjustified oppression of foreign companies,” ministry spokesman Wang Wenbin told a regular news conference in Beijing on Friday.
The Commerce Department published a list of 77 companies and subsidiaries in the so-called list of entities, including 60 Chinese companies.
The Commerce Department’s designations include some entities in China that allegedly allow human rights abuses and some help build and militarize artificial islands in the South China Sea, the agency said.
He also cited entities that acquired items of American origin to support the Chinese military and those engaged in the theft of U.S. trade secrets.
Companies that have been added earlier to the list include telecommunications team giants Huawei Technologies Co. and 150 subsidiaries, and ZTE Corp. for sanctions violations, as well as surveillance camera maker Hikvision for suppression of the Uyghur minority in China.
FRAY TIES
Shares of SMIC, formally Semiconductor Manufacturing International Corp., fell 5.2% in Hong Kong on Friday, while the company’s Shanghai listed shares fell 1.8%. Benchmark indices in both markets fell by less than 1%.
SMIC had already been in Washington’s sights.
In September, the Commerce Department ordered suppliers of certain equipment from the company to apply for export licenses after concluding that there was an “unacceptable risk” that the equipment supplied to it could be used for purposes. military.
Last month, the Department of Defense added the company to a separate blacklist of alleged Chinese military companies, effectively banning U.S. investors from buying its shares as of the end of next year.
SMIC has repeatedly said it has nothing to do with the Chinese military.
SMIC is the largest Chinese chip manufacturer, but follows Taiwan Semiconductor Manufacturing Co., the market leader in the industry. Attempts have been made to build foundries for the manufacture of computer chips that can compete with those of TSMC.
Ties between Washington and Beijing have grown increasingly antagonistically over the past year, as the world’s two largest economies faced Beijing’s manipulation of the coronavirus outbreak, the imposition of a national security law on Hong Kong. Kong and rising tensions in the South China Sea.
Report by David Shepardson and Alexandra Alper; Additional reports 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