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19 August
Monday

Asia

Chinese "black list" of companies can cause great harm to corporations

Vague wording of the law can be used to control any imported goods

Photo: Xinhua

/NOVOSTIVL/ Three days after China announced its plan to create an "еntity list" of foreign companies and individuals that are deemed to be hurting Chinese interests, there are more questions than answers about the mechanism that could put many multinationals into a Catch-22 situation amid the intensifying rivalry with the United States. This article appeared in the South China Morning Post.

In a hastily arranged press conference for a selected group of state media on Friday, Ministry of Commerce spokesman Gao Feng said that China will start to implement a list for "unreliable" foreign companies and individuals, who would be punished if they were found to be blocking or cutting back supplies to Chinese companies for non-commercial purposes.

The ministry did not immediately specify the possible consequences, nor did it directly link the move to the treatment of Huawei or China’s technology rivalry with the US.

China’s state media, though, made it clear that Beijing is doing so in response to the US decision last month to place Huawei on a trade blacklist that could effectively ban US companies from supplying components and software to the Chinese telecommunications giant.

Zhi Luxun, director of the industry and security bureau within the Commerce Ministry, was quoted by the official Xinhua news agency as saying on Saturday that Beijing would consider four factors in deciding whether to blacklist a foreign entity.

Firstly, whether an entity had blocked or cut back providing supplies to one or more Chinese firms; secondly, whether such an act was made for non-commercial purposes; thirdly, whether such acts caused serious damage to Chinese companies or industries; and finally, whether such acts posed a threat or potential threat to China’s national security.

If these vaguely defined conditions were applied strictly, those US companies that have agreed to follow Washington’s directive to stop providing key components to Huawei, including the likes of Intel, Qualcomm, Microsoft and Google, could be placed on Beijing’s list.

European and Japanese companies will also face the choice of whether to follow Washington’s directive to stop supplying Chinese businesses and therefore risk being adding to Beijing’s blacklist.

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