US sanctions on Chinese firm at centre of South China Sea island-building ‘could ripple across Asia’

China Communications Construction Company’s massive regional presence means the censure will impact multiple governments and companies, diplomatic observers say

CCCC is involved in 923 projects in 127 countries, including Malaysia’s East Coast Rail Link, seen as one of the jewels of the Belt and Road Initiative

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Chinese dredging vessels are purportedly seen in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea, in this 2015 handout photo from the US Navy. Photo: Reuters

Published: 7:00am, 28 Aug 2020Updated: 10:27pm, 28 Aug 2020

The United States’ blacklisting of the Chinese contractor at the centre of Beijing’s island-building activity in the disputed South China Sea could have a disruptive ripple effect across Asia, diplomatic observers have said, pointing to the firm’s extensive presence from Sri Lanka to the Philippines.

The censure’s impact might also be felt by American firms that would be required to obtain licences before they exported products to support Asian projects linked to the China Communications Construction Company (CCCC), the analysts said.

Malaysia’s US$10.5 billion East Coast Rail Link, the US$1.4 billion Port City Colombo in Sri Lanka and a new US$10 billion airport outside the Philippine capital of Manila are among CCCC’s marquee overseas projects.

Given the scale of the Chinese firm’s regional presence, observers who spoke to This Week in Asia predicted multiple governments as well as local corporate entities that had partnered with CCCC and its subsidiaries would be scrambling in the coming days to figure out just how the sanctions worked.

CCCC is embedded in Asian economies partly because of their participation in the Belt and Road Initiative, Beijing’s multibillion-dollar infrastructure programme.

Political risk consultancy Eurasia Group in a note on Wednesday said the company was currently involved in 923 projects in 157 countries.

Hoo Chiew Ping, an international relations researcher with the National University of Malaysia, said CCCC’s involvement was one of the criteria used within the research community to assess whether a project was part of the belt and road plan.