Adding Tencent and CATL, the Biden administration, at the end of its tenure, has expanded its list of Chinese military companies, thus decoupling the potential US-China economic disruptions in global supply chains. Impacting key technology firms and creating heightened bilateral tensions, this move is part of ongoing efforts to counter China’s military-civil fusion strategy.
The Biden administration blacklisted on Monday Tencent Holdings Ltd., the world’s largest video-game publisher, and Contemporary Amperex Technology Co. Ltd., a core battery supplier for Tesla Inc. Both companies appearing on a US list of companies are said to be involved directly or indirectly with China’s People’s Liberation Army or as contributing significantly to the industrial base of that nation.
Since the first list was published in 2021, when it went into effect as a result of legislation passed in the final days of Donald Trump’s first term, the list has grown to include 134 companies including four of China’s top 20 by market capitalization, valued at almost $1 trillion.
While no specific sanctions are carried by the list, unlike the Commerce Department’s Entity List, dealing with its members is still discouraged by US firms, and a reputational hit is incurred by the firms involved. The register’s quick growth demonstrates how the boundaries between military and civilian businesses are becoming increasingly hazy and how supply chain division could worsen if more stringent regulations are implemented in the future.
Singapore’s former ambassador to the United Nations Kishore Mahbubani has described the new measure as “unwise” and believes it could land as a boomerang on the other end for Washington. “The entire world will gradually come to rely on the Chinese companies for everything from the latest smartphones and cars to software and batteries,” Mahbubani, who is also the author of Has China Won?, said. If the US tries to decouple from Chinese companies and their global reach, Mahbubani added, “it is not decoupling from China. It is decoupling from the rest of the world, too.”
Although the list has been at the end of Joe Biden’s term, Marco Rubio, who was nominated to become the secretary of state in Trump’s second term, has been a strong advocate for tagging CATL and other significant Chinese companies.
The US has characterized the list as a means of highlighting and opposing China’s “military-civil fusion strategy,” which is purported to help the modernization objectives of the PLA by ensuring advanced technologies and expertise developed by Chinese companies, universities, and research programs that appear to be civilian entities can be acquired.
The question of whether a hardline stance toward China will be adopted by Trump, as indicated by his threats to impose tariffs as high as 60%, or a more pragmatic view will be taken — as suggested by his efforts to overturn a ban on TikTok and his close ties with Tesla founder E, is raised.
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