(Adds China commerce ministry comment in paragraph 8)
By Mike Stone, Alexandra Alper and David Brunnstrom
WASHINGTON, Jan 14 (Reuters) - The Trump administration took
another swipe at China and its biggest firms on Thursday,
imposing sanctions on officials and companies for alleged
misdeeds in the South China Sea and imposing an investment ban
on nine more firms.
The moves come just days before Trump steps down and
President-elect Joe Biden takes office.
Executives of state-owned enterprises, officials of the
Chinese Communist Party and military, along with oil giant CNOOC
face new restrictions for allegedly using coercion against
states with rival claims in the South China Sea.
Senior U.S. officials told reporters on Thursday the new
CNOOC restrictions would not apply to crude, refined fuels and
liquid natural gas and do not apply to existing joint ventures
with CNOOC that do not operate in the South China Sea.
Nine Chinese firms were added to the Pentagon's list of
companies with alleged ties to the Chinese military, including
planemaker Comac CMAFC.UL and phone maker Xiaomi Corp
1810.HK .
Those companies will be subject to a new U.S. investment ban
which forces American investors to divest holdings of the
blacklisted firms by Nov. 11, 2021.
Chinese foreign ministry spokesman Zhao Lijian said in
Beijing on Friday that China firmly opposed the new sanctions.
"This action is against the trend of the times and is against
its self-touted market competition and international economic
trade rules," he said.
In a statement later on Friday, China's Ministry of Commerce
said the United States was using "all kinds of excuses" to
suppress Chinese companies and urged Washington to correct its
wrongdoings. The Biden transition team did not immediately respond to a
request for comment.
Shares in Xiaomi closed down 10% on Friday, against a 0.4%
drop in the Hang Seng index .HSI , while CNOOC listed arm CNOOC
Ltd 0883.HK fell 1.1%.
CHINA SAYS U.S. EXPLOITING STATE POWER
The United States has long opposed China's territorial
claims in the South China Sea, a potentially resource-rich area
that is also a trade route. Washington accuses Beijing of
intimidating states such as Vietnam and the Philippines that
have rival claims there.
China accuses Washington of trying to destabilize the region
by sending warships and planes to the South China Sea.
"The United States stands with Southeast Asian claimant
states seeking to defend their sovereign rights and interests,
consistent with international law," Secretary of State Mike
Pompeo said in announcing the sanctions.
Pompeo said Washington was imposing visa restrictions on
executives of Chinese state-owned enterprises and officials of
the Chinese Communist Party and navy.
The sanctions were directed against those "responsible for,
or complicit in, either the large-scale reclamation,
construction, or militarization of disputed outposts in the
South China Sea, or use of coercion against Southeast Asian
claimants to inhibit their access to offshore resources."
CNOOC 'INTIMIDATES CHINA'S NEIGHBORS'
The Commerce Department accused CNOOC of harassing and
threatening offshore oil and gas exploration and extraction in
the South China Sea to drive up the political risk for its
rivals, including Vietnam.
Commerce Secretary Wilbur Ross said CNOOC acted as "a bully
for the People's Liberation Army to intimidate China's
neighbors" and the Chinese military "continues to benefit from
government civil-military fusion policies for malign purposes."
Ross's department added CNOOC to an "Entity List" that
requires firms to be granted a special license before they can
receive exports of high-tech items from U.S. suppliers.
Chen Weidong, the Beijing-based founder of independent
consultancy DFS Energy, said CNOOC had very limited exposure to
U.S. expertise.
The company "may still need some components and equipment
like logging tools from the U.S. but that is not hard to replace
and China may need to catch up in manufacturing by itself," Chen
said.
A second oil executive close to CNOOC said the offshore
giant has increasingly turned to private local companies for
services and the blacklist also could benefit engineering and
equipment providers in Europe.
Chinese aviation firm Skyrizon was added to a Military
End-User (MEU) List over its ability to develop military
products including aircraft engines, restricting its access to
U.S. exports.
Aside from Comac and Xiaomi, the Pentagon added Advanced
Micro-Fabrication Equipment Inc 688012.SS (AMEC), Luokung
Technology Corp, Beijing Zhongguancun Development Investment
Center, GOWIN Semiconductor Corp, Grand China Air Co Ltd, Global
Tone Communication Technology Co Ltd and China National Aviation
Holding Co Ltd to the list.
AMEC said it had no ties to China's military and the
measures will have "no substantial impact on operations and
production".
Xiaomi said the company "is not owned, controlled or
affiliated with the Chinese military" and it would take an
appropriate course of action following the order.
China's last week published new rules for countering laws
and restrictions imposed by foreign countries.
The Trump administration has pulled some punches against
Beijing in its final days as the Treasury Department has eased
hardline policies sought by other U.S. agencies.
On Wednesday, it scrapped plans to blacklist Chinese tech
giants Alibaba, Tencent (HK:0700) and Baidu, amid pushback from Treasury
Secretary Steven Mnuchin, who is seen as more dovish on China,
sources said. On Thursday, Treasury also issued a general license
exempting U.S. securities exchanges from the investment ban for
transactions with newly blacklisted Chinese companies.
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U.S. commission says China possibly committed 'genocide' against
Xinjiang Muslims ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>