On Thursday (Dec. 3), the U.S. government officially blacklisted four additional Chinese Communist Party companies – SMIC, CNOOC, China Construction Technology, and CIECC.
The U.S. Department of Defense believes that these four Chinese companies are owned or controlled by the Chinese military and endanger U.S. national security, thus restricting U.S. investors from investing in them.
On Nov. 30, the media reported that the U.S. may add these companies to its blacklist, and the stocks of the four companies immediately dived, with CNOOC, a Hong Kong-listed subsidiary of CNOOC, plunging nearly 14%.
The U.S. Department of Defense has yet to take any punitive measures against the blacklist, but President Donald Trump issued an executive order in November to prevent U.S. investors from buying securities of blacklisted companies starting in the second half of next year.
Under a 1999 U.S. law, the Defense Department was required to compile a list of companies owned or controlled by the Communist Party’s military, and it will not do so until 2020. Hikvision, China Telecom and China Mobile were added to the list earlier this year.
SMIC was founded in 2000 and has since become one of mainland China’s most prominent chip makers, but is highly dependent on equipment from U.S. suppliers, with its biggest customer being Huawei, which has suffered numerous U.S. restrictions.
In late September, the Financial Times reported that the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has a document showing that SMIC has also been blacklisted by the U.S. under a trade embargo, which means the U.S. has imposed import and export controls on it.
On Thursday, U.S. Director of National Intelligence John Ratcliffe said in a commentary in the Wall Street Journal that the Chinese Communist Party (CCP) is now the greatest threat to the United States and the greatest threat to democracy and freedom worldwide since World War II.
He argues that the CCP’s economic espionage tactics are “rob, copy and replace,” “stealing the intellectual property of U.S. companies, copying the technology, and then replacing it in the global marketplace.” In particular, the CCP attempts to steal sensitive U.S. defense technology “to further Xi Jinping’s ambitious plan to make China the world’s most important military power.”
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