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The latest US move targets 37 mainland Chinese companies and universities. Photo: AFP

37 Chinese firms and universities added to US ‘unverified list’ telling suppliers to handle them with care

  • US Commerce Department warns that it cannot verify that organisations in question are abiding by export administration regulations
  • As well as 37 mainland bodies, six Hong Kong firms also included on list as Beijing claims US is abusing its rules

The US has put dozens of Chinese companies and universities on a Commerce Department “unverified list” demanding extra caution from US suppliers in dealing with these organisations.

A 32-page report published on Thursday added a total of 50 bodies to the list – making it harder for US companies to do business with them.

The department said it was unable to verify that the organisations in question were abiding by US Export Administration Regulations.

Those affected included 37 mainland Chinese companies and universities, many of which work in fields such as precision optics, electronics, machine tools or aviation.

A spokesman for China’s Commerce Ministry, Gao Feng, said on Thursday that the move would have a negative impact on Chinese enterprises and accused the US of abusing its export restrictions.

“China called on the US to rectify its mistake by following the principle of mutual trust and mutual benefit,” Gao said.

Kevin Wolf, a former assistant secretary of commerce for export administration who is now at the law firm Akin Gump, said that being placed on the unverified list meant US suppliers could no longer use licence exemptions to sell products such as repair equipment to them.

He told Reuters that in some cases they would need to obtain fresh licences to supply things it had previously sold them, adding: “Even though it’s not an embargo, because of the hassle sometimes suppliers will treat it as an embargo.”

Besides the 37 mainland Chinese organisations, six Hong Kong firms – Able Supply Chain, Boson Technology, HK Hengyu Storage Logistics, Rising Logistics, Swelatel Technology and Universe Market – were also included on the list.

A Chinese subsidiary of a Japanese auto parts manufacturer Aisin Nantong Technical Centre and high-end screen manufacturing company Beijing Bayi Space LCD Materials Technology Company were also on the list.

Educational institutes affected included Changchun Institute of Applied Chemistry, Guangdong University of Technology, Renmin University and Tongji University in Shanghai.

According to information posted on its website, Changchun Institute of Applied Chemistry specialises in research in fields such as defence and economic development as well as training graduate students.

The entities “could not verify their bona fides because an end-use check could not be completed satisfactorily for reasons outside the US Government’s control,” the Commerce Department wrote in its report. These checks included both pre-licence and post-shipment verification, it said.

The US Department of Commerce warned it could not verify that the organisations affected were complying with export regulations. Photo: Alamy

One analyst said the move may been seen as a way for the US to keep up its pressure on Beijing, amid their ongoing strategic and economic rivalry.

Zhang Baohui, professor of political science and director of the Centre for Asian Pacific Studies at Lingnan University in Hong Kong, said the additions to the unverified list were part of US efforts to “tighten control over technology exports to China for national security reasons”.

He said: “It reflects rising American concerns over the evolving balance of power between the two countries. The Chinese will no doubt see it as a containment measure.

“This latest development shows an accelerating strategic rivalry between China and the United States. It is thus not a negotiating tactic by the Trump administration to affect the trade talks.

This latest development shows an accelerating strategic rivalry between China and the United States
Prof Zhang Baohui, Lingnan University

“Rather, it is part of a broader and long-term US strategy to affect the future balance of power between the two countries,” Zhang added.

The US has been sending out mixed signals regarding China in recent weeks and on Wednesday it was reported that the two sides had agreed to establish enforcement offices in the event of a trade deal.

US Treasury Secretary Steven Mnuchin said they had “basically settled on a mechanism to police any agreement, including new enforcement offices”.

But US president Donald Trump has indicated that he is in “no rush” to complete a deal to end the trade war been the two sides.

Trump said after the latest round of negotiations in Washington last week that conclusion of the trade talks between the world’s two largest economies may take another four weeks.

The new unverified listing also included four entities in the United Arab Emirates, two in Malaysia, and one in Indonesia.

Additional reporting by Reuters

This article appeared in the South China Morning Post print edition as: 37 firms and universities on U.S. ‘handle with care’ list
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