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China Releases Details on Its Own Unreliable Entity List

FILE - Paramilitary policemen perform exercises at China's Ministry of Commerce in Beijing, Feb. 11, 2019.

China's Ministry of Commerce has released long-awaited provisions on its "unreliable entity list," in a move seen as a countermeasure to similar actions taken by Washington.

The vaguely worded document laid out consequences for a foreign entity that is deemed to be a danger to "national sovereignty, security or development interests of China."

Companies that are on the list could be banned from trade and investing in China, and face hefty fines or entry restrictions on their employees.

China's Ministry of Commerce had promised to draw up an unreliable entity list in May 2019 shortly after U.S. President Donald Trump announced adding Chinese telecommunication firm Huawei to a U.S. blacklist.

The ministry rolled out the details more than 16 months after that announcement — one day after the U.S. Commerce Department announced its ban on American users downloading the Chinese app WeChat and video-sharing app TikTok.

No immediate consequences

Analysts say the provisions released Saturday have no immediate consequences for American companies in China; however, the move does mean China risks losing the goodwill of those companies which have lobbied for closer economic ties between the two countries.

Jeff Moon, who served as assistant U.S. Trade Representative for China affairs during the final year of President Barack Obama's administration, told VOA Mandarin that the wording in the current statement is sufficiently vague to avoid any immediate consequences for foreign firms.

"Nonetheless, it reminds the U.S. government and American companies of China's intention and potential to retaliate," he said.

He said China is waiting for the results of the U.S. election before any further actions.

FILE - U.S. President Donald Trump attends a bilateral meeting with China's President Xi Jinping in Osaka, Japan, June 29, 2019.
FILE - U.S. President Donald Trump attends a bilateral meeting with China's President Xi Jinping in Osaka, Japan, June 29, 2019.

"Trump continues to take provocative actions, but China has decided not to retaliate concretely until the results of the presidential election and the extent to which U.S. policy might change during the next administration," he added.

Derek Scissors, an economist with the think tank American Enterprise Institute in Washington, D.C., agreed with that statement. Nevertheless, he added, China risks losing its biggest advocate in Washington by announcing the provisions.

"Because American companies are China's biggest allies in the political debate here, China would be retaliating against its friends," he told VOA Mandarin.

Who's on the list?

William Reinsch, a trade expert with the Center for Strategic and International Studies in Washington, D.C., said he believes that China will retaliate, and is deciding which companies should be on the list.

"I'm sure they're trying to think about who would be on it. But in my experience with the Chinese, they're very careful not to do things that hurt themselves," he told VOA Mandarin.

He said that large American firms that have a foot in China are big employers, meaning that sanctioning them "is going to affect a lot of Chinese workers." On top of that, U.S. firms operating in China provide tax revenue for the Beijing government.

China's state newspaper, The Global Times, reported the British bank HSBC and U.S. delivery firm FedEx would top the list.

Pedestrians walk past a HSBC logo in Hong Kong, Sept. 21, 2020.
Pedestrians walk past a HSBC logo in Hong Kong, Sept. 21, 2020.

China's Commerce Ministry said in a news briefing that the unreliable entity list would not target a specific country or entity.

The ministry also emphasized that it would continue to welcome foreign investors, and further open the economy by deepening market reforms.

The Washington-based industry group U.S.-China Business Council (USCBC) called for restraint in how the unreliable entity list is used.

"Companies increasingly feel squeezed between the U.S. and Chinese governments, where complying with the rules of one government may cause them to run afoul of rules of the other government," it said in a statement.

According to USCBC's 2020 annual member survey, U.S. companies with a presence in the China market list U.S.-China relations as the top challenge for conducting business in China.