The Chinese government said on Friday that it was putting together an “unreliable entities list” of foreign companies and people, an apparent first step toward retaliating against the United States for denying vital American technology to Chinese companies.
China’s Ministry of Commerce said the list would contain foreign companies, individuals and organizations that “do not follow market rules, violate the spirit of contracts, blockade and stop supplying Chinese companies for non-commercial reasons, and seriously damage the legitimate rights and interests of Chinese companies.”
In a statement, China’s Ministry of Commerce noted that companies and “unreliable entities ” which “do not follow market rules, violate the spirit of contracts, blockade and stop supplying Chinese companies for non-commercial reasons, and seriously damage the legitimate rights and interests of Chinese companies” risk being blacklisted in the Asian nation.
The move escalates trade war that ensued after President Trump’s placed Huawei on an “entity list” of firms that need special permission to buy American components and technology.
Shortly afterward, some American technology companies, including Google said they would stop supplying Huawei. The American government has since granted Huawei a 90-day waiver giving Chinese and American officials time to reach an agreement. The Trump administration is also said to be considering putting Hikvision a Chinese video surveillance company, on the list.
Yet if Beijing was willing to take that hit, many companies would struggle to immediately replicate production elsewhere. China’s density of component makers and assembly factories is unmatched around the world.
“It’s a really high-risk way to go about it,” said Andrew Polk, a founder of Trivium, a consulting firm in Beijing. “They are effectively forcing companies to choose, and companies will probably choose the U.S.”