In the latest escalation of trade tensions between the world’s two largest economies, China announced export control measures on Thursday targeting 28 U.S. companies and added 10 more U.S. firms to a list of entities barred from conducting business in China.
The larger group primarily consists of defense contracting firms, including Lockheed Martin and five of its subsidiaries; General Dynamics and three of its subsidiaries; three subsidiaries of Raytheon; one subsidiary of Boeing; and over a dozen other companies.
Chinese companies are now prohibited from selling “dual-use” items—goods that could serve both military and civilian purposes—to any of the listed companies.
In an announcement, the Chinese Ministry of Commerce stated that these sanctions were implemented “to safeguard national security, interests, and fulfill international obligations such as non-proliferation.”
Experts Weigh In
Experts suggest that since U.S. defense contractors typically do not engage with the country’s major adversaries, the new restrictions will likely have minimal impact on the targeted companies.
Raymond Kuo, a director and senior political scientist at the RAND Corporation, remarked, “Short answer is, this won’t have much, if any effect, on those companies: They didn’t do business with China anyway.” He noted that the move would likely not affect the broader U.S. economy.
However, Kuo added that the sanctions reflect China’s willingness to respond reciprocally to U.S. sanctions, as the Biden administration has enacted multiple sanctions in recent months. “It does show that the Chinese are willing to go kind of tit for tat with the United States,” Kuo stated. “If we increase our levels of trade sanctions—and [President-elect Donald] Trump has threatened 60% tariffs across the board—they can retaliate in a variety of ways.”
Designation of ‘Unreliable’ Entities
In a second announcement, the Ministry of Commerce added 10 companies from the initial list—subsidiaries of Lockheed Martin, General Dynamics, and Raytheon—to its “unreliable entities” list. This designation entails harsher sanctions.
The affected companies are banned from importing or exporting goods to and from China and from making new investments there. Moreover, executives of these companies are prohibited from traveling to China, and any existing work or residency permits they hold are revoked.
The Ministry emphasized that all companies designated as unreliable have sold arms to Taiwan, the democratically self-governing island that China claims as its territory. The new restrictions aim to “safeguard national sovereignty, security, and development interests.”
These additions to the unreliable entities list come just a week after Beijing announced earlier sanctions on U.S. firms and their executives for selling arms to Taiwan, which included subsidiaries of Raytheon and Boeing.
Liu Pengyu, spokesperson for the Chinese Embassy in Washington, communicated via email that the 28 companies facing export controls “endanger China’s national security.” He further stated, “The Chinese government will continue to unswervingly promote high-level opening up, firmly safeguard the legitimate rights and interests of various business entities, and promote the development of compliant trade.”
Retaliatory Measures
Thursday’s announcement follows a series of recent actions by Beijing to tighten trade with the U.S., often in response to U.S. sanctions on Chinese businesses.
Earlier in December, the Biden administration announced a ban on the sale of advanced semiconductor manufacturing equipment to Chinese firms, alongside adding 140 Chinese companies to a restricted business list for U.S. individuals and firms.
In retaliation, China imposed new restrictions on the sale of “rare earth” minerals to the United States. China dominates the global market for minerals such as gallium, germanium, and antimony, essential for various high-tech products, from smartphones to missile guidance systems.
Just over a month ago, the Biden administration finalized rules restricting outbound U.S. investments in China, particularly in advanced semiconductors, microelectronics, quantum computing technology, and artificial intelligence systems.
