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Sector
Technology
Size
Large Cap
Market Cap £5.30bn
Enterprise Value £6.70bn
Revenue £20.64bn
Position in Universe 1078th / 6647

EXCLUSIVE-U.S. to publish list of Chinese and Russian firms with military ties

Mon 21st December, 2020 7:51pm
(Adds details on the list)
    By Karen Freifeld
    Dec 21 (Reuters) - The Trump administration on Monday plans
to publish a list of Chinese and Russian companies with alleged
military ties that restrict them from buying a wide range of
U.S. goods and technology, said senior U.S. Commerce Department
officials.
    Reuters first reported last month that the U.S. Department
of Commerce drafted a list of companies that it linked to the
Chinese or Russian military, news that brought a rebuke from
Beijing.  urn:newsml:reuters.com:*:nL1N2I701N
    The final list does not include Commercial Aircraft
Corporation of China (COMAC), or the Hong Kong subsidiaries of
Colorado's Arrow Electronics  ARW.N  and Texas-based TTI Inc, a
Berkshire Hathaway  BRKa.N  electronics distributor, the
officials said. Those companies were on the draft list seen by
Reuters.
    The final list names 103 entities, 14 fewer than on the
draft list seen by Reuters in November. Fifty-eight are
designated under China, down from 89, and 45 entities are tied
to Russia, up from 28, one of the officials said.
    Commerce Secretary Wilbur Ross said on Monday the action
establishes a new process "to assist
exporters in screening their customers for military end users." 
    The final list is expected to be published on the Commerce
Department website on Monday and for public inspection in the
Federal Register on Tuesday, the officials said.
    Publishing the list in the waning days of the Trump
administration follows the addition of dozens of Chinese
companies to another U.S. trade blacklist, including the
country's top chipmaker, SMIC  0981.HK , and Chinese drone
manufacturer SZ DJI Technology Co Ltd, on Friday.  L1N2IY0S3 
    Tensions between Washington and Beijing have escalated over
the past year, as Trump blamed China for the coronavirus
pandemic, a national security law was imposed in Hong Kong and a
dispute involving the South China Sea has intensified.
    The U.S. government also has grown increasingly concerned
about China’s “military-civil fusion,” a policy that aims to
build up its military might and technological development in
tandem.
    Last spring, the Commerce Department expanded the definition
of "military end users," as the department defines the companies
with military ties.  urn:newsml:reuters.com:*:nL2N2CF0JS
    The category includes not only armed service and national
police, but any person or entity that supports or contributes to
the maintenance or production of military items - even if their
business is primarily non-military.
    The "military end user" designation requires U.S. companies
to obtain licenses to sell to the firms, which are more likely
to be denied than granted. 
    One of the officials stressed the list is not definitive and
that U.S. companies must continue to do their own due diligence
to help decide whether their buyers are considered military end
users.
    Publication of the list is likely to inflame Beijing.
Chinese Foreign Ministry spokesman Zhao Lijian in November
called news of the draft list "unprovoked suppression of Chinese
companies by the United States."      
    While COMAC was removed, seven Aviation Industry Corporation
of China (AVIC) related entities remain on the list.
    General Electric Co  GE.N  and Honeywell International
 HON.N  both have joint ventures with AVIC and supply COMAC,
which is spearheading Chinese efforts to compete with Boeing Co
 BA.N  and Airbus  AIR.PA .
    Arrow and TTI have both denied their subsidiaries have ties
to the Chinese military and have said they were working to be
removed from any final list.  urn:newsml:reuters.com:*:nL4N2II3P7    

 (Reporting by Karen Freifeld in New York
Editing by Chris Sanders and Matthew Lewis)
 ((karen.freifeld@thomsonreuters.com; +1(646) 223-6921;))
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