US Blacklists 59 Chinese Companies Over National Security Concerns

A security officer stands outside a building of Semiconductor Manufacturing International Corp. (SMIC) during its grand opening in Shanghai on Nov. 22, 2001. (Reuters)

The United States has added dozens of Chinese companies, including a top manufacturer of semiconductors, to a trade blacklist because of national security concerns, Commerce Secretary Wilbur Ross said.

The Commerce Department released a list of 77 companies and affiliates to be included on the so-called entity list, including 59 Chinese companies.

“What this is all about is these are companies that are tied to the People’s Liberation Army,” Ross said on Dec. 18. “This has to do with is their access to very advanced semiconductor products.”

Among those blacklisted include Semiconductor Manufacturing International Corp. (SMIC), which is the largest Chinese chip manufacturer and supplies firms such as Qualcomm and Broadcom. Those companies will join the likes of Huawei and hundreds of other Chinese companies, according to Ross.

The move will “ensure that China, through its national champion SMIC, is not able to leverage U.S. technologies to enable indigenous advanced technology levels to support its destabilizing military activities,” Ross said in a statement.

The State Department said four Chinese companies were added to the list for “enabling human rights abuses within China by providing DNA-testing materials or high-technology surveillance equipment” to the regime. They included Chinese drone-maker DJI, the world’s biggest manufacturer of commercial drones.

“We urge the Chinese Communist Party to respect the human rights of the people of China, including Tibetan Buddhists, Christians, Falun Gong members, Uyghur Muslims, and members of other ethnic and religious minority groups,” Secretary Mike Pompeo said in a statement.

Also sanctioned were 19 Chinese entities involved in “systematically coordinating and committing more than a dozen instances” of theft of U.S. trade secrets, undermining U.S. efforts to counter trafficking of nuclear materials, or flouting U.S. export controls, according to Pompeo. This includes several defense universities that support the Chinese military.

The Trump administration also imposed restrictions on dozens of Chinese entities that aid Beijing’s aggressive activities to stake its territorial claims in the South China Sea. This includes 25 research institutes affiliated with state-owned China State Shipbuilding Corp., as well as state-run China Communications Construction Co.

Secretary of Commerce Wilbur Ross on Capitol Hill in Washington on March 5, 2020. (Saul Loeb/AFP via Getty Images)

In September, the Department of Commerce sent a letter to companies saying they must obtain a license before exporting certain products to China, as such a move “may pose an unacceptable risk of diversion to a military end-use in the People’s Republic of China.”

Last month, the Defense Department added the semiconductor company to a blacklist of alleged Chinese military-linked companies, effectively banning U.S. investors from buying its shares starting late next year. SMIC has said it has no ties to the Chinese military.

The Trump administration has frequently used the entity list—which now includes nearly 300 China-based companies and affiliates—to affect key Chinese industries. In addition to Huawei and about 150 affiliates, ZTE Corp. also was placed on the list due to a violation of sanctions.

Surveillance camera maker Hikvision was put on the blacklist due to the CCP’s persecution of several groups. Hikvision’s public security manager, Qian Hao, in 2013 bragged that its camera networks “can help preserve stability by seeing which family someone comes from, then persuading their relatives to stop them from harmful behavior, like with Falun Gong,” a meditation practice whose adherents have been subject to rampant human rights abuses since July 1999. Hikvision’s technology is also involved in the CCP’s surveillance operations of the Uyghur minority in Xinjiang.

Reuters and Cathy He contributed to this report.