US and EU Countries Blacklist Chinese Companies as ‘Military End-Users’

The US government puts several Chinese, Pakistani and Russian companies and entities on a trade blacklist and are included in the “military end-user” (MEU) Entity List. The US Department of Commerce announced on 24 November that eight Chinese technology entities have been included in the list of entities for supporting the military modernization of the People’s Liberation Army (PLA) and either acquiring or attempting to acquire items originating from the United States to support military applications.

It is part of the US government’s efforts to prevent emerging US technologies from being used in China’s quantum computing support for military applications, including anti-stealth and anti-submarine applications, as well as cracking encryption or developing unbreakable encryption capabilities. This action will also restrict the export of products to Chinese electronic product manufacturers that support the military modernization efforts of the Chinese People’s Liberation Army.

The eight companies are: Hangzhou Zhongke Microelectronics Co Ltd, Hunan Goke Microelectronics Co. Ltd, New H3C Semiconductor Technologies Co Ltd, Xi’an Aerospace Huaxun Technology, Yunchip Microelectronics, Hefei National Laboratory for Physical Sciences at Microscale, Quantum CTek and Shanghai Quantum CTeck Co Ltd.

The Biden administration said that 16 entities and individuals operating in China and Pakistan were included in the list of entities for their contributions to Pakistan’s unsecured nuclear activities or ballistic missile programs. In addition, the three subsidiaries of Corad Technology Limited, which were included in the entity list in 2019, are also included in the list because they have participated in military and space projects from the United States and other Western countries to Iran, and North Korea’s Nominal companies, as well as entities affiliated to the Chinese government and the defence industry, sell technology.

The Ministry of Commerce’s Industry and Security Bureau, which is responsible for export control policies, also added the Moscow Institute of Physics and Technology to the list of “military end-users” because the institute produces military products for military end-users.

“The action will help prevent the misappropriation of US technology to the military development of the People’s Republic of China and Russia and activities that raise concerns regarding non-proliferation, such as Pakistan’s unsafe nuclear activities or ballistic missile programs,” US Secretary of Commerce Lei Mundo said in a statement.

Since the Trump administration, entity lists and military end-user lists have been increasingly used for national security and foreign policy purposes. Many well-known Chinese companies, including telecommunications giant Huawei, are included in the US Department of Commerce’s entity list or the Chinese Communist Party’s military enterprises of the Department of Defence.

China’s Beachhead for European Union Italy Vetoed Chinese Company

Just before the coronavirus outbreak, Italy was called Beijing’s beachhead for the European Union, but the Italian government has blocked the acquisition of a Chinese company in Italy on 23 November. It is a high-tech enterprise with the leading technology in semiconductor material equipment and LED substrate material manufacturing in mainland China. Italian Industry Minister Giancarlo Giorgetti said he believed that the acquisition may have an impact on the strategic semiconductor industry.

This is the third time that the Italian government vetoed Chinese mergers and acquisitions since this last year. In October, it vetoed an Italian vegetable seed producer’s sale to the Chinese Syngenta Group, and in April prevented Shenzhen INVISTA from acquiring a majority stake in an Italian semiconductor equipment company.

Invoking the “golden power” rule that Italy protects “assets that are of strategic importance to national interests”, it denied Chinese company of Italian drone maker take over. It has been revised several times since it was proposed in March 2012. Italy has used the bill five times to prevent foreign entities from acquiring Italian companies, four of which involved Chinese companies; three times were rejected after Italian Prime Minister Mario Draghi took office.

Italy used to be the most pro-China country in the European Union and both the countries are comprehensive strategic partners. A spokesman for the Chinese Foreign Ministry said that China hopes that the Italian side will continue to abide by the principle of free trade and provide a fair, just and non-discriminatory business environment for Chinese enterprises.

A few days ago, the government of Greenland, another European country, announced on 23 November that it had revoked a Chinese mining company’s license to mine iron ore locally, which would have hit China’s attempts to enter this resource-rich Arctic Island. Greenland is an autonomous region within the framework of the Kingdom of Denmark.

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