Beijing set to create blacklist of 'unreliable' foreign firms, individuals

The Bayan Obo mine, which contains rare earth minerals, in Inner Mongolia, China. Beijing has prepared the steps it will take to use its stranglehold on the critical minerals to hurt the US economy, according to people familiar with the matter. PHOTO
The Bayan Obo mine, which contains rare earth minerals, in Inner Mongolia, China. Beijing has prepared the steps it will take to use its stranglehold on the critical minerals to hurt the US economy, according to people familiar with the matter. PHOTO: REUTERS

BEIJING • China has said it will create a blacklist of "unreliable" foreign firms and individuals in a new escalation of its trade war with the United States.

The move comes two weeks after Chinese technology giant Huawei was added to the US Commerce Department's "entity list", cutting it off from critical American-made components for its products, though a 90-day reprieve was issued.

The Chinese move to create its own "entity list" appears to be a way to pressure foreign companies to maintain commercial relations with Huawei.

"Foreign enterprises, organisations or individuals that do not comply with market rules, deviate from a contract's spirit or impose blockades or stop supplies to Chinese enterprises for non-commercial purposes, and seriously damage the legitimate rights and interests of Chinese enterprises, will be included on a list of 'unreliable entities'," said Chinese Commerce Ministry spokesman Gao Feng.

He added that the detailed measures of China's list will be announced soon.

"Some foreign entities have violated normal market rules and the spirit of their contracts for non-commercial purposes, blockading and cutting off supplies and taking other discriminatory actions against Chinese companies, damaging their legitimate rights and interests, and endangering China's national security and national interests," Mr Gao said, according to the state-owned Global Times.

Meanwhile, Beijing has readied a plan to restrict exports of rare earths to the US if needed, according to people familiar with the matter. The government has prepared the steps it will take to use its stranglehold on the critical minerals in a targeted way to hurt the US economy, the sources said.

 
 
 
 

The measures would likely focus on heavy rare earths, a sub-group of the materials which the US is particularly reliant on China for. The plan can be implemented as soon as the government decides to go ahead, the sources said, without giving further details.

Heavy rare earths include dysprosium, which is used in magnets that are commonplace in almost all cars and many consumer goods.

The group also has yttrium, used in lighting and flat screens, as well as ytterbium, which has applications in cancer treatments and earthquake monitoring.

China produces about 80 per cent of the world's rare earths, and an even higher proportion of the elements in their processed forms.

The elements are also used in weaponry, amid a host of applications key to US supply chains.

Rare earths are divided into two main categories - heavy and light - corresponding to atomic weight. Heavy rare earths are less common and are important for lasers, sonar and strengthening steel, among other things.

AGENCE FRANCE-PRESSE, BLOOMBERG

 
A version of this article appeared in the print edition of The Straits Times on June 01, 2019, with the headline 'Beijing set to create blacklist of 'unreliable' foreign firms, individuals'. Print Edition | Subscribe