U.S. Moves to Ban Tech Exports to 89 Chinese Firms, Reuters Says

(Bloomberg) — The Trump administration is close to issuing a list of 89 Chinese aerospace and other companies that would be unable to access U.S. technology exports due to their military ties, Reuters reported, a move that could escalate tensions as the Biden administration prepares to take over.

A spokesman for the U.S. Department of Commerce declined to comment, Reuters said. Commercial Aircraft Corp. of China Ltd., or Comac, and Aviation Industry Corp. of China Ltd. are among the firms named, Reuters reported, citing a draft copy of the list from the U.S. Commerce Department.

Such a declaration would restrict the companies from buying American goods and technology, Reuters said.

The move could fuel already-heightened tensions between the U.S. and China on fronts ranging from trade and Taiwan to the handling of the coronavirus as President-elect Joe Biden prepares to take over from Donald Trump.

China’s Foreign Ministry said Monday that it “firmly” opposed the “U.S. oppression of Chinese companies without a cause.”

“The U.S. should stop extending and stretching the concept of national security to oppress foreign companies,” Foreign Ministry spokesman Zhao Lijian said at a daily briefing.

Piling Pressure

AVIC is a state-owned conglomerate with 100-plus subsidiaries and more than 450,000 employees. The Trump administration in June put AVIC on a list of companies it said were controlled or owned by China’s People’s Liberation Army. The firm also runs a civilian business that makes airliners and private jets — some built with parts made by joint ventures with American companies.

State-owned Comac is manufacturing alternatives to Boeing Co. and Airbus SE planes and now delivering them to the major Chinese carriers. The company is producing a single-aisle model designed to rival the Boeing 737 and Airbus A320 and it is in the early stages of developing a widebody aircraft. AVIC is a shareholder in the planemaker.

In its latest forecast on China’s commercial aviation market, Boeing said the country’s airlines are likely to buy 8,600 new planes over the next 20 years for a total of $1.4 trillion.

One company especially at risk is General Electric Co., a supplier to Comac. For its C919 narrow-body plane that’s now in testing, Comac uses engines from CFM International, a 50/50 joint venture between General Electric and France’s Safran SA.

Trump in February intervened to thwart efforts by China hawks to stop the sale of those engines, Bloomberg News reported. “We don’t want to make it impossible to do business with us,” he said in a tweet then. “That will only mean that orders will go to someplace else.”

GE also has exposure through Aviage Systems, its 50-50 joint venture with AVIC. The C919 has Aviage-made equipment such the flight recording, flight management and onboard maintenance systems.

The U.S. list comes after Trump earlier this month signed an order barring American investments in Chinese firms owned or controlled by the military, as he increases pressure on Beijing in his final months in office.

The U.S. Securities and Exchange Commission is pushing ahead with a plan that threatens to kick Chinese firms off U.S. stock exchanges, Bloomberg reported last week, intending to propose a regulation by year-end that would lead to the delisting of companies for not complying with America’s auditing rules.

Reuters also reported Sunday that a senior U.S. military officer who oversees intelligence gathering for the Indo-Pacific Command made an unannounced visit to Taiwan, a move that risks further raising tensions between Washington and Beijing.

*story by Bloomberg