China has added 10 United States-based companies to its export control list and barred government procurement from nearly 50 US companies two weeks after the Pentagon blacklisted some of China’s best-known companies for their alleged ties to the Chinese military.
China’s Ministry of Commerce announced the export order on Monday, barring Chinese companies from exporting “dual-use” items that can be used for civilian or military purposes to the US firms.
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The list of companies includes rare-earth mine operator MP Materials Corp, rare-earth magnet maker USA Rare Earths, and US defence contractors specialising in fields such as aerospace, drones, synthetic-aperture radar, and shipbuilding and repairs.
Under the order, “foreign institutions and individuals worldwide are also prohibited from transferring or providing Chinese dual-use goods to them” while ongoing export transactions must be suspended immediately.
The Commerce Ministry said the export ban had been issued to “safeguard national security and interests and fulfil international obligations such as non-proliferation”.
China’s Ministry of Finance on Monday separately barred Chinese government procurement from 46 companies, including subsidiaries of major US defence contractors like Lockheed Martin, Boeing, General Atomics and General Dynamics. US-funded, locally registered companies, however, have been given an exemption by the ministry.
Experts described Beijing’s orders as a retaliation, albeit a largely symbolic one, against the US after the Pentagon in early June added about 80 Chinese companies and their subsidiaries to its list of “Entities Identified as Chinese Military Companies Operating in the United States”.
The designation means the Pentagon either believes the companies are owned or controlled by the Chinese military or they are “military-civil fusion contributors”, a term for commercial companies that contribute to China’s military development despite their civilian status.
The updated list includes Chinese e-commerce giant Alibaba Holdings, search engine giant Baidu and electric automaker BYD, some of China’s largest and best-known companies.
While the order does not bar US companies from doing business with them, it does impact US defence contractors and their future supply chains.
“We can interpret this as a tit-for-tat response, and that fits into China’s playbook any time we’ve seen escalation from the US side in terms of trade and investment tools,” said Nick Marro, global trade lead analyst at the Economist Intelligence Unit.
China-based supply chain consultant Cameron Johnson said the Commerce Ministry’s order mirrors US semiconductor export controls designed to keep the most advanced chips out of Chinese hands.
“They basically say it doesn’t matter where or who you are, you are bound by this regardless of circumstance,” said Johnson, who is also a senior partner at the Shanghai consultancy Tidal Wave Solutions. “Organisations or individuals in any country or region are prohibited from transferring dual-use materials that originated in China.”
He said Beijing’s orders in practice may be hard to enforce and many of the companies named in those orders have already moved their supply chains out of China or begun to “de-risk” their operations there.
Johnson said the wide scope of companies included in Washington’s and Beijing’s directives could be a sign of more to come and may signal a new front in the US-China trade war.
“This is probably just the beginning of the back and forth,” he said. Last year, after returning to the White House for a second term, US President Donald Trump reignited the US-China trade war, leading Washington and Beijing to impose escalating rounds of tariffs on each other.
Trump and Chinese President Xi Jinping agreed to a trade truce in October, which was extended during a summit between the two leaders in Beijing in May.
Despite promises to “enhance economic cooperation” during the meeting, observers like Singapore-based geopolitical analyst Steve Okun predicted the goodwill may be short-lived.
“The US’s recent closure of chip export loopholes and China’s continuing addition to its export bans show the national security lane remains active in both capitals regardless of the diplomatic niceties at the recent Trump-Xi summit,” Okun told Al Jazeera.
“There is no ‘truce’ in the US-China trade war. Expect further actions from both sides as well on export controls and investment restrictions,” he said.
