Is China’s ‘going global’ strategy at risk after US widens its trade blacklist?

Washington’s decision to broaden its trade blacklist could put many overseas subsidiaries of Chinese firms under scrutiny, potentially disrupting their “going global” strategies and reigniting trade tensions between the two superpowers, analysts said.

The US Bureau of Industry and Security (BIS) announced on Monday that any company at least 50 per cent owned by firms already on the US Entity List or the Military End-User List – which target entities Washington deems a security threat – will now automatically face the same restrictions.

The US Department of Commerce said the new rules are effective immediately, with certain exceptions permitted for up to 60 days following their publication in the Federal Register on Tuesday.

The move came as China and the US weigh their next steps in trade talks.

“If companies on the blacklist have in fact been using subsidiaries to circumvent restrictions and these new rules are effective in closing that loophole, there will be pain,” said Stephen Olson, a visiting senior fellow at ISEAS-Yusof Ishak Institute and a former US trade negotiator.

He called the revision an “overdue corrective” to a gap that previously allowed blacklisted firms to maintain access via related companies. The impact “could be significant”, he added.

South China Morning Post