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US clamps down on China tech, blacklists CNOOC

·3-min read
The United States accused CNOOC of bullying in the disputed South China Sea

The US government on Thursday ramped up sanctions and restrictions on Chinese firms over Beijing's actions in the disputed South China Sea, and the security threat posed by technology.

In a wide ranging series of steps unveiled in the waning days of President Donald Trump's administration, Washington targeted state oil giant CNOOC and announced regulations on tech firms including embattled social media favorite TikTok.

It reflects flurry of last-minute pressure on Beijing, following four years of aggressive diplomatic and trade policies against the rival economic power.

The Commerce Department added CNOOC to its blacklist over what it called "belligerent" actions, and the State Department restricted visas for the company's executives, as well as government and military officials.

"China's reckless and belligerent actions in the South China Sea and its aggressive push to acquire sensitive intellectual property and technology for its militarization efforts are a threat to US national security and the security of the international community," Commerce Secretary Wilbur Ross said in a statement.

"CNOOC acts a bully for the People's Liberation Army to intimidate China's neighbors, and the Chinese military continues to benefit from government civil-military fusion policies for malign purposes."

The territorial dispute has festered for years, with Beijing ignoring US protests as it built a series of artificial islands to expand its military and commercial reach in the region that is believed to have valuable oil and gas deposits -- which Washington values at $2.5 trillion.

China claims nearly all of the South China Sea, including the Spratly Islands, though Taiwan, the Philippines, Brunei, Malaysia and Vietnam all claim parts of it.

"CNOOC has repeatedly harassed and threatened offshore oil and gas exploration and extraction in the South China Sea, with the goal of driving up the political risk for interested foreign partners, including Vietnam," the Commerce Department said.

- Delisted & blacklisted -

The State Department said the aim is "the preservation of a free and open South China Sea."

Senior administration officials told reporters the CNOOC blacklist do not apply to trade hydrocarbons like crude oil and gas, or to joint ventures outside the disputed region.

The economic crackdown comes after a White House order in November blocking Americans from investing in Chinese companies deemed to be supplying or supporting the country's military and security apparatus that led to delisting major firms from Wall Street.

The New York Stock Exchange removed tech giants China Telecom, China Mobile and China Unicom from trading as of January 11, but has not taken action on CNOOC.

The Treasury Department last week announced it would add CNOOC to its sanctions list, which aim to freeze any assets under US jurisdiction and bans American firms -- including banks and other companies with branches in the United States -- from doing business with them.

Following that announcement, S&P Dow Jones Indices late Wednesday announced that it will strip CNOOC from its stock indices "on or before February 1."

- New rules on technology -

Meanwhile, Commerce announced new rules for trading in technology and communications equipment with "foreign adversaries" including China, Russia, Iran, North Korea, Cuba and Venezuela.

The rule, to be published Friday, will take effect in 60 days. It stems from an executive order Trump issued in May 2019, and officials said it was decided after careful review with the private sector, and published with the hope the incoming administration of President-elect Joe Biden would keep the policies in place.

The aim is to protect against data and national security vulnerabilities in software and hardware, and would outline a six-month review process before any ban would be implemented.

A senior administration official confirmed the new rule would apply to TikTok, the video app that Trump banned from operating in the United States.

hs/ft