China sanctions two US firms over arms sales to Taiwan

It also imposed several sanctions on the firms, including a ban on trade activities related to China and huge fines for participating in arms sales to Taiwan

NEW DELHI | Updated: 17 April, 2023 10:24 pm IST
China has decided to put Lockheed Martin and Raytheon, which participated in arms sales to China’s Taiwan region, on the unreliable entities list, effective immediately

China on Thursday added two major US defence contractors, Lockheed Martin Corp. and Raytheon Missiles & Defense, to its unreliable entities list. It also imposed several sanctions on the firms.

Apart from a ban on trade activities related to China, huge fines have also been imposed against the firms for participating in arms sales to Taiwan.

In a statement on Thursday, the Ministry of Commerce (MOFCOM) said that it has decided to put Lockheed Martin and Raytheon, which participated in arms sales to China’s Taiwan region, on the unreliable entities list, effective immediately.

Apart from the ban, the ministry has added further countermeasures against the two firms, including banning them from conducting import and export activities related to China and from adding new investments in China.

Furthermore, senior executives of the two companies are also banned from entering China, while work and residency permits for senior executives will be revoked if currently held, or not granted if applied for in the future, according to MOFCOM.

MOFCOM has further imposed separate fines on the two companies that are twice the amount of their arms sales to Taiwan. They are to pay the fines within 15 days or face higher fines, according to the statement.

In February 2022, the US government approved a possible $100 million sale of military equipment and services to Taiwan, and the main contractors were supposed to be Lockheed Martin and Raytheon, as per US media reports.

China moved to establish the unreliable entities list in March 2019, as the trade war between the Chinese and US governments escalated during that period. The US government came down hard on the Chinese companies by adding them to the Entity List and banning them from doing business in the US.

In September 2020, the Chinese government announced the regulations to be implemented on the unreliable entities list.

As per the regulations introduced, MOFCOM could take action against any foreign entities that were found to be involved in activities that could endanger China’s national sovereignty, security or development interests and take discriminatory measures against Chinese entities and individuals.

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