China has imposed sanctions on U.S. military contractors Lockheed-Martin Corp and Raytheon Missiles & Defense for selling arms to Taiwan, but China's Ministry of Commerce (MOFCOM) said this should be of no concern to other foreign-invested enterprises (FIEs). Last week China added the two companies to its “unreliable entities list”, the first time it used the mechanism since its introduction in 2019. The two U.S. companies are banned from trading with China and were told to pay fines totaling twice the amount of their arms sales to Taiwan within 15 days or face increased penalties.
The sales, which include offensive weapons such as missiles and fighter jets, seriously undermined China's national security, sovereignty and territorial integrity and violated the one-China principle and the three China-U.S. joint communiqués, a Chinese spokesperson said. “China lawfully prosecuted these entities, which through their unlawful wrongdoings seriously put China's sovereignty, security and developmental interests into harm's way,” the spokesperson added. The scope of the unreliable entities list mechanism will not be randomly expanded and foreign-invested companies in China have no need for added concerns. China will welcome foreign companies to further invest in China, with officials working to improve its business environment in a market-oriented, law-based and internationalized manner, according to a Chinese statement. The Chinese action is in compliance with WTO rules, the spokesperson said, noting that China will continue to support multilateral trade mechanisms and free trade, and promote the sound development of the global economy. “Foreign companies that operate normally should not be concerned with the entity list, as its sphere is clearly defined,” Bai Ming, Deputy Director of the International Market Research Institute at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times.
This kind of punishment is reserved for peddlers of hegemony like Lockheed Martin and Raytheon, who have crossed China's legal bottom line, Dong Shaopeng, Senior Research Fellow at the Chongyang Institute for Financial Studies at Renmin University of China, said. The vast majority of foreign companies can count on resolving business and trade disputes via legal means and friendly communication, and China still welcomes foreign companies to tap into its vast market.