China’s Lockheed Martin sanctions reveal limited options in fighting economic war with US

Because China needs investment inflows from the United States, Beijing must be careful about sanctioning American firms

Boeing was sanctioned in 2010 for arms sales to Taiwan but continued to do strong business selling planes and parts to China’s commercial airlines

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Lockheed Martin, the world’s largest military contractor, is the first American company that the Chinese government has targeted for punishment during the Trump administration. Photo: Reuters

Published: 7:00pm, 21 Jul 2020Updated: 3:42am, 22 Jul 2020

China’s announcement that it will impose sanctions on American firm Lockheed Martin for its involvement in the United States’ arms sale to Taiwan has highlighted a harsh reality for Beijing: it has far fewer choices to inflict pain on American businesses than Washington does against Chinese firms in the escalating conflict between the world’s two biggest economic powers.

Lockheed Martin, the world’s largest military contractor, is the first US company that the Chinese government has officially targeted for punishment since US President Donald Trump moved into the White House. However, Beijing has not released details of the sanctions.

The naming of Lockheed Martin marks a step further in Beijing’s careful strategy of hurting US businesses while trying to avoid damaging its own interests.

Yet, more than a year after Beijing warned that it was compiling an Unreliable Entity List of firms whose actions hurt China – in apparent response to the US Commerce Department’s Entity List that Washington has used to sanction a number of Chinese firms, Huawei in particular – the Chinese government has yet to publish which foreign businesses will be on the list or what punishments they will face.

[It] is good for China to keep the sanction details vague. If not, future actions against the US will be predictable, and that will make China passive in strategy and tactics

Shi Yinhong

Official state media, including the nationalistic Global Times tabloid, hinted last year that Honeywell, Oshkosh, General Dynamics and its Gulfstream Aerospace subsidiary, were being targeted. However, Beijing has never officially confirmed the list.

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