WASHINGTON (REUTERS) - The Trump administration on Thursday (Dec 3) added China's top chipmaker, SMIC, and oil giant CNOOC, to a blacklist of alleged Chinese military companies, drawing condemnation from Beijing as President-elect Joe Biden prepares to take office.
The Department of Defense designated a total of four additional companies as owned or controlled by the Chinese military, including China Construction Technology Co Ltd and China International Engineering Consulting Corp.
The move, first reported by Reuters on Sunday (Nov 29), takes to 35 the total number of blacklisted companies. While the list did not initially trigger any penalties, a recent executive order by Republican President Donald Trump will prevent US investors from buying the firms' securities from late next year.
In Beijing, a foreign ministry spokeswoman said China opposed US efforts to suppress its companies, adding that Washington's moves run counter to principles of market competition.
"The US should stop abusing national power and national security concepts to suppress foreign companies," Hua Chunying told a regular news briefing on Friday (Dec 4).
China National Offshore Oil Corp (CNOOC) did not respond immediately to a request for comment.
In a stock market statement, SMIC said it strongly opposed the decision, which reflected a fundamental misunderstanding by the US administration of the end-uses of its business and technology.
The company also said there was no major impact from its addition to the list. Its Hong Kong shares closed on Friday down 5.4 per cent after having resumed trading in the afternoon following a suspension.
Shares of CNOOC's listed unit CNOOC Ltd, had fallen nearly 14 per cent percent after Sunday's report, and tumbled 3.9 per cent by Friday's market close.
SMIC, which relies heavily on equipment from US suppliers, was already in Washington's crosshairs.
In September, the US Commerce Department informed some firms they needed to obtain a license before supplying goods and services to SMIC after concluding there was an "unacceptable risk" that equipment supplied to it could be used for military purposes.
The expanded blacklist is seen as part of a bid to cement outgoing Republican Trump's tough-on-China legacy and to box incoming Democrat Biden into hardline positions on Beijing amid bipartisan anti-China sentiment in Congress.
The measure is also part of a broader effort by Washington to target what it sees as Beijing's efforts to enlist corporations to harness emerging civilian technologies for military purposes.
The list of "Communist Chinese Military Companies" was mandated by a 1999 law requiring the Pentagon to compile a catalog of companies "owned or controlled" by the People's Liberation Army, but DOD only complied in 2020. Giants like Hikvision, China Telecom and China Mobile were added earlier this year.
In November, the White House published an executive order, first reported by Reuters, that sought to give teeth to the list by prohibiting US investors from buying securities of the blacklisted companies from November 2021.
Top US asset managers Vanguard Group and BlackRock Inc each own about 1 per cent of shares of CNOOC's listed unit CNOOC Ltd, and together own roughly 4 per cent of outstanding shares of SMIC, disclosures show.
Congress and the administration have sought increasingly to curb the US market access of Chinese companies that do not comply with rules faced by American rivals, even if that means antagonising Wall Street.
On Wednesday, the US House of Representatives passed a law to kick Chinese companies off US stock exchanges if they do not fully comply with the country's auditing rules, giving Mr Trump one more tool to threaten Beijing with before leaving office.
