Experts: US suppression of Chinese firms unreasonable

United States authorities' fast and loose moves to blacklist Chinese companies, and then remove them later, shows their growing lack of legitimacy, and will only trigger countermeasures from Chinese counterparts, industry experts said on Tuesday.

They made the comments as the US Department of Defense on Monday added tech company Tencent Holdings and major electric vehicle battery maker Contemporary Amperex Technology Co Ltd to a long list of Chinese companies it has deemed to be "military companies".

Meanwhile, the Pentagon also removed six companies it said no longer met the requirements for the designation, including artificial intelligence company Beijing Megvii Technology, China Railway Construction Corporation, China State Construction Group and China Telecommunications.

In response to the blacklisting, Tencent said on Tuesday that its inclusion is a "mistake", as the company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base. CATL also called the designation a mistake, saying that it "is not engaged in any military-related activities".

Tu Xinquan, dean of the University of International Business and Economics' China Institute for WTO Studies, said that US suppression has become increasingly unreasonable and lacks legitimacy.

"Their goals have been unmasked, that is, to suppress emerging Chinese companies and industries and curb China's technological rise at minimal cost," Tu said.

"However, the more Washington escalates its measures against China, the less effective these measures prove to be, and the more they reveal their underlying fears," he said.

As US threats to China have gone beyond economic competition, Tu said that China is ready to "take necessary countermeasures to safeguard its own security and interests".

These countermeasures include imposing export controls on critical resources like rare earth minerals, which are essential for military and technological applications, he said.

Foreign Ministry spokesman Guo Jiakun said at a news conference on Tuesday that China always firmly opposes the US' generalization of the concept of national security, the establishment of various discriminatory lists, the unreasonable suppression of Chinese enterprises and the curbing of China's high-quality development.

The Ministry of Commerce said that such moves undermined the security and stability of global industrial and supply chains, and China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese entities.

The latest list of Chinese companies, mandated under US law as the "Section 1260H list", designated 134 companies, including chipmaker ChangXin Memory Technologies, Quectel Wireless Solutions and drone maker Autel Robotics.

Brian Tycangco, an editor and analyst at Stansberry Research, who follows China, Asia, tech, energy and commodities, posted on social media platform X: "It's turning out that if you're an innovative Chinese business making money, you're likely to be considered a threat to US national security."

Liu Ying, a senior researcher at the Chongyang Institute for Financial Studies at Renmin University of China, said that the US' ungrounded accusations will only trigger comprehensive countermeasures from Chinese companies and industries, especially arbitration and lawsuits.

Tencent said on Tuesday that it will engage in discussions with the Pentagon to resolve any misunderstanding and, if necessary, will "undertake legal proceedings".

In fact, the move came just weeks after the Pentagon removed two companies, including Advanced Micro-Fabrication Equipment Inc China, a leading Chinese chip equipment manufacturer, from the blacklist.

AMEC, which said it has never been involved in military activities, filed a federal lawsuit against the decision in August. The court ruled in December there was "insufficient evidence" to justify the decision.

In 2021, Chinese smartphone maker Xiaomi filed a lawsuit against the US Department of Defense over the same blacklist. Four months later, the Chinese tech company was removed from the list.

According to Liu, the World Trade Organization's website showed that the number of cases in which the US has been the defendant far exceeded that of nearly all European Union economies so far, and the US has lost in most of them.