major tech brands could be hit

China plans sanctions list for 'unreliable entities'

Is China's threatened list a serious effort to protect itself or a negotiating tactic for trade talks with the Trump administration?

In the midst of their war with the Trump administration over the blacklisting of Huawei Technologies, government officials in China say they will create a list of so-called “unreliable entities” believed to pose a threat to the best interests of companies there. Global trade analysts say the move could impact thousands of firms.

“Foreign enterprises, organizations, and individuals that do not comply with market rules, violate the spirit of contract, block or cut supplies to Chinese firms with non-commercial purposes, and seriously damage the legitimate rights and interests of Chinese enterprises, will be added to the list of unreliable entities,” said Gao Feng, a spokesperson at the Ministry of Commerce.

China Trade
China Trade

China's Commerce Ministry is going through relevant procedures, and will release the first batch of blacklisted entities soon, according to state media China Central Television, Bloomberg reported.

According to analysts, the Chinese move allows Beijing to target a broad sampling of the global tech companies, including Google, Qualcomm. and Intel.

The dispute heated up in May when the US and Trump said they would blacklist Huawei but then later appeared to back away from its threats. 

The list is also expected to be a major bargaining chip in tradediscussions between the two countries.

Mark Brannan, AEB’s International Business Development Director, said the move by China appears to be a counter to US measures.

“Given the timing of the announcement, it seems very likely that this is a tit-for-tat measure aimed to counter Trump’s sanctions on Huawei,” he said.

“The language used by Chinese officials to describe “unreliable entities” that will be included in the new sanctions list is strikingly similar to that used in the US Executive Order on Securing the Information and Communications Technology and Services Supply Chain. That can’t be pure coincidence. This surely is a measure to strengthen the Chinese position as they enter into trade discussions with the US.”

Brannan said there are four key questions companies need to ask if they do business in China or with a partner that does:

  • How is your company preparing for the upcoming changes in Chinese export control law?
  • Does your company work locally with Chinese lawyers (authorities, chambers of commerce, business associations, etc.) who are familiar with Chinese export control?
  • Given that China’s action targets companies that comply with recent US export control regulations, procurement and other trade restrictions involving Huawei, ZTE, and others, this raises potential conflict of law issues. Has your company investigated these potential legal conflicts? Are you able to manage the introduction of these new sanctions in your current business processes? Do you need to make changes to your export control compliance program?
  • How will you screen for entities listed on the new Chinese list? Do you have automated screening software in place for this?
China Trade 2
China Trade 2

Compliance Screening from AEB automatically runs restricted party screenings for you in the background. The intelligent software, which can be used anywherein the world, warns you before a business partner becomes a liability.

Quickly and reliably, while the rest of your business continues uninterrupted. The AEB software lets you run all your processes with peace of mind, secure in the knowledge that you’re complying with all relevant sanctions.

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