The Chinese government has announced sanctions targeting U.S. defense, drone, and rare earth companies. This move is a response to the U.S. Department of Defense's recent addition of companies like Alibaba, Baidu, and BYD to its list of "Chinese military supporting companies."
According to reports from CNBC and others on June 22, the Chinese Ministry of Commerce has placed 10 U.S. firms, including MP Materials and USA Rare Earth, which are involved in rare earth production, and drone manufacturers Tildrones and Ziya Robotics, on its export control list. As a result, dual-use items from China cannot be exported to these companies.
The list also includes California-based electronics manufacturer Aviox, aerospace and technology firm Ball Aerospace and Technologies, and military equipment company Oshkosh Defense.
Additionally, the Chinese Ministry of Finance issued a separate statement excluding 46 U.S. companies from participating in Chinese government procurement projects. Most of these companies are defense contractors, including Lockheed Martin, Raytheon Missile & Defense, General Atomics Aeronautical Systems, General Dynamics Land Systems, and Boeing's Defense, Space & Security division.
This action is seen as retaliation for the U.S. Department of Defense's recent update of its so-called "1260H list," which identifies companies believed to support the Chinese military. The updated list includes Alibaba Group, Baidu, and electric vehicle manufacturer BYD.
Being added to the 1260H list does not immediately trigger sanctions. However, starting June 30, the U.S. Department of Defense will be prohibited from entering into contracts with the listed companies, and indirect procurement will be restricted beginning in 2027.
Chinese authorities previously stated they would take all necessary measures to protect the legitimate rights and interests of Chinese companies in response to U.S. actions. They criticized the U.S. for creating discriminatory lists under the guise of national security.
A spokesperson for the Ministry of Commerce explained in a Q&A format that the sanctions were imposed in response to the U.S. government's malicious act of adding to the so-called "Chinese military supporting companies" list.
However, experts believe that these measures are more symbolic than a significant escalation in U.S.-China relations. Han Sun-lin, a director at the consulting firm Asia Group, noted that most of the targeted companies have little to no meaningful business exposure in China, suggesting that China's response is more of a retaliatory message than a substantial increase in tensions.
Dan Wang, a director at Eurasia Group, assessed that while this action responds to the U.S.'s moderate level of pressure, it reflects China's strategy to maintain overall stability in bilateral relations.
* This article has been translated by AI.
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