US Set To Link 89 Chinese Firms To The Military

The Trump administration is close to declaring that 89 Chinese aerospace and other companies have military ties, restricting them from buying a range of US goods and technology, according to a draft copy of the list seen by Reuters.

The list, if published, could further escalate trade tensions with Beijing and hurt US companies that sell civil aviation parts and components to China, among other industries.

A spokesman for the US Department of Commerce, which produced the list, declined to comment.

Speaking in Beijing, Foreign Ministry spokesman Zhao Lijian said China "firmly opposes the unprovoked suppression of Chinese companies by the United States."

What the United States is doing severely violates the principle of market competition and international norms for trade and investment that the US claims to uphold, he added.

Chinese companies have always operated in accordance with the law and strictly follow local laws and regulations when operating overseas, including in the United States, Zhao said.

Commercial Aircraft Corp of China Ltd (COMAC), which is spearheading Chinese efforts to compete with Boeing and Airbus, is on the list, as is Aviation Industry Corporation of China (AVIC) and 10 of its related entities.

The list is included in a draft rule that identifies Chinese and Russian companies the US considers "military end users," a designation that means US suppliers must seek licenses to sell a broad swath of commercially available items to them.

According to the rule, applications for such licenses are more likely to be denied than granted.

US President Donald Trump has stepped up his actions in recent months against China. Ten days ago, he unveiled an executive order prohibiting US investments in Chinese companies that Washington says are owned or controlled by the Chinese military.

The pending list comes after the Commerce Department expanded the definition of "military end user" in April.

The April rule includes not only armed service and national police, but any person or entity that supports or contributes to the maintenance or production of military items -- even if their business is primarily non-military.

The export restriction applies to items as disparate as computer software like word processing, scientific equipment like digital oscilloscopes, and aircraft parts and components.

In terms of aircraft, the items include everything from brackets for flight control boxes to the engines themselves. (Reuters)