China said it will establish a list of so-called “unreliable” entities it says damage the interests of domestic companies, a sweeping order that could potentially affect thousands of foreign firms as tensions escalate after the U.S. blacklisted Huawei Technologies Co.
China will set up a mechanism listing foreign enterprises, organizations and individuals that don’t obey market rules, violate contracts and block, cut off supply for non-commercial reasons or severely damage the legitimate interests of Chinese companies, Ministry of Commerce spokesman Gao Feng said. Details of the list were not immediately available, though more will be announced “soon.”
The U.S. government has moved to curb Huawei’s ability to sell equipment in the U.S. and buy parts from American suppliers, potentially crippling one of China’s most successful — but controversial — global companies. That step has helped broaden the tariff war into a wider confrontation between China and the U.S., at a time when negotiations between the two sides have broken down.
The vague wording of the Chinese state media report opens the door for Beijing to target a broad swathe of the global tech industry — from U.S. giants like Alphabet Inc.’s Google, Qualcomm Inc. and Intel Corp. to even non-American suppliers that have cut off China’s largest technology company. Those run the gamut from Japan’s Toshiba to Britain’s Arm.
“Surely companies that have announced cutting supplies to Huawei, such as Panasonic and Toshiba, would be under threat,” said Michelle Lam, Greater China economist at Societe Generale SA in Hong Kong. “It could be very damaging to multinational companies.’’
The tariff conflict is set to ratchet up this weekend as the U.S. locks down higher duties on about $200 billion of goods arriving from China and Beijing implements its own retaliation. Talks between the two sides stalled earlier after U.S. President Donald Trump accused China of backing out of a deal that was taking shape and saying that China reneged on an agreement to legislate various agreed reforms.
China’s blacklist threat “sends pressure to Washington as the ban (on Chinese companies) from the U.S. side goes wider,” said James Yan, a Counterpoint Research analyst. “China may pick a few ‘bad examples’ to punish, but it’s unlikely to hit everyone in the supply chain.”
Chinese state media has floated potential retaliatory measures in recent days. Bloomberg News reported Friday that Beijing has readied a plan to restrict exports of rare earths to the U.S. if needed, according to people familiar with the matter. The measures would likely focus on heavy rare earths, a sub-group of the materials where the U.S. is particularly reliant on China.