UPDATE 6-U.S. targets Chinese individuals, companies amid South China Sea dispute

(Adds comment from Chinese embassy in Washington, paragraphs
8-10)
By Susan Heavey, Daphne Psaledakis and David Brunnstrom
WASHINGTON, Aug 26 (Reuters) - The United States on
Wednesday blacklisted 24 Chinese companies and targeted
individuals it said were part of construction and military
actions in the South China Sea, its first such sanctions move
against Beijing over the disputed strategic waterway.
The U.S. Commerce Department said the two dozen companies
played a "role in helping the Chinese military construct and
militarize the internationally condemned artificial islands in
the South China Sea."
Separately, the State Department said it would impose visa
restrictions on Chinese individuals "responsible for, or
complicit in," such action and those linked to China's "use of
coercion against Southeast Asian claimants to inhibit their
access to offshore resources."
The companies blacklisted included Guangzhou Haige
Communications Group 002465.SZ , several firms that appear to
be related to the China Communications Construction Co
601800.SS , as well as Beijing Huanjia Telecommunication,
Changzhou Guoguang Data Communications, China Electronics
Technology Group Corp SASAFF.UL and China Shipbuilding Group.
It was the latest U.S. move to punish firms whose goods may
support Chinese military activities and comes in the run up to
the Nov. 3 U.S. election, in which both President Donald Trump
and rival Joe Biden have been sharply critical of China.
The United States accuses China of militarizing the South
China Sea and trying to intimidate Asian neighbors who might
want to exploit its extensive oil and gas reserves.
U.S. warships have gone through the area to assert the
freedom of access to international waterways, raising fears of
clashes. A spokesperson for China's embassy in Washington condemned
the U.S. sactions as "completely unreasonable," and urged the
United States to reverse them.
"(South China Sea Islands) is an integral part of China's
territory, and it is fully justified for us to build facilities
and deploy necessary defense equipment there," the spokesperson
said.
"The Chinese government has firm determination to safeguard
its sovereignty and territorial integrity."
A U.S. defense official, speaking on the condition of
anonymity, told Reuters that on Wednesday China launched four
medium-range ballistic missiles that hit the South China Sea
between Hainan Island and the Paracel Islands.
The official added that an assessment was underway to
determine the type of missile launched.
The Hong Kong-based South China Morning Post newspaper
quoted a source close to the Chinese military as saying that
China had launched two missiles, including an “aircraft-carrier
killer”, into the South China Sea on Wednesday morning in a
warning to the United States.
China complained that the United States had sent a U-2
reconnaissance plane into a no-fly zone over Chinese live-fire
military drills on Tuesday. The Pentagon said a U-2 flight conducted in the Indo-Pacific
region was "within the accepted international rules and
regulations governing aircraft flights."
In July, Washington said it could sanction Chinese officials
and enterprises involved in coercion in the South China Sea
after it announced a tougher stance rejecting Beijing's claims
to offshore resources there as "completely unlawful."
China claims virtually all of the potentially energy-rich
South China Sea, but Brunei, Malaysia, the Philippines, Taiwan
and Vietnam also lay claim to parts of an area through which
about $3 trillion of trade passes each year.
"This is the first time the U.S. has levied any type of
economic sanction against Chinese entities for behavior in the
South China Sea," said Greg Poling, a South China Sea expert at
Washington's Center for Strategic and International Studies.
"It probably doesn't make much impact on those entities
directly - I doubt that there is much CCCC needs to buy from the
U.S. that it can't get from other suppliers. And these certainly
aren't the financial sanctions that some might have expected ...
But it could be a start at trying to convince Southeast Asian
partners that the new policy is more than just rhetoric."
Messages left with CCCC, a transport and infrastructure
conglomerate, the Shanghai Cable Offshore Engineering Co Ltd, an
engineering company that specializes in submarine cables, and
Guangzhou Haige Communication Group, which manufactures
communications equipment, were not immediately returned after
business hours in China. Several other firms on the list could
not immediately be reached or could not immediately be located.
The Commerce Department said it was adding the 24 firms to
its "entity list," which restricts sales of U.S. goods shipped
to them and some more limited items made abroad with U.S.
content or technology. Companies can apply for licenses to make
the sales, but they must overcome a high bar for approval.
The State Department did not name those subject to visa
bans, but a senior department official told reporters "dozens"
would be affected. A senior Commerce Department official said
U.S. exports to the Chinese companies targeted had been
relatively small - about $5 million in the last five years.