China restricts exports to 10 U.S. defense-linked firms
Beijing said the curbs answer U.S. military-company designations targeting Chinese tech firms including Alibaba and Baidu.
By Daniel Okafor · Business Editor
3 min read
China imposed new restrictions Monday on 10 U.S. military-related companies, raising pressure in a dispute over defense contracting and technology controls. The measures matter because they add another layer to the growing exchange of security-linked trade actions between Beijing and Washington.
China’s Commerce Ministry said Chinese companies may no longer export dual-use goods to the named U.S. firms. Dual-use items are products or materials that can serve civilian purposes as well as military ones.
The ministry said the move was intended to protect China’s national security and was a response to what it described as Washington’s improper expansion of a list identifying Chinese companies with alleged military ties. The U.S. Defense Department earlier this month added several Chinese technology companies, including Alibaba and Baidu, to that list, according to the department.
Export controls target defense and materials firms
The 10 companies named by China include drone makers, defense contractors and companies tied to rare earth mining. The Commerce Ministry said companies and individuals in third countries are also barred from transferring Chinese dual-use items to the sanctioned firms.
Beijing left open a limited path for exceptions. The ministry said Chinese companies could seek export approval for goods it considered genuinely necessary.
The companies covered by the export restrictions are AVEOX of Simi Valley, California; Red Cat Holdings and Teal Drones of South Salt Lake, Utah; IMSAR of Springville, Utah; Jaia Robotics of Bristol, Rhode Island; Ball Aerospace & Technologies of Broomfield, Colorado; Oshkosh Defense of Oshkosh, Wisconsin; L3Harris Maritime Services of Norfolk, Virginia; MP Materials of Las Vegas; and USA Rare Earth of Stillwater, Oklahoma.
George Chen, partner for Greater China at advisory firm The Asia Group, said the action was expected and broadly matched the U.S. step. Chen said the affected companies are largely defense-sector firms or have close ties to U.S. government contracts, making the practical effect limited because many are unlikely to have major China business.
China also bars purchases from 46 U.S. companies
In a separate action, China’s Finance Ministry said government entities are prohibited from buying goods from 46 American companies. The list includes multiple units of Lockheed Martin, Raytheon and General Dynamics, according to the ministry.
The Finance Ministry’s short statement did not explain the reason for the procurement ban.
The U.S. Defense Department’s designation blocks the listed Chinese companies from receiving U.S. military contracts. Baidu has rejected the U.S. characterization, saying the claim that it is a military company is baseless.
China’s Commerce Ministry had previously said the U.S. measures conflicted with the consensus reached by Chinese leader Xi Jinping and U.S. President Donald Trump during Trump’s May visit to China. Monday’s announcement places U.S. defense-linked companies under Chinese export controls as both governments continue to use national security rules to limit business with firms tied to the other side’s military sector.
This story draws on original reporting from Fortune.