Why China sanctions (again) Lockheed Martin and Raytheon
China's move against Lockheed Martin and Raytheon comes for arms sales to Taiwan. The two companies will be banned from doing business with the People's Republic of China and from making new investments in the country
China hits US defense giants again.
Beijing has decided to adopt sanctions against American arms manufacturers Lockheed Martin and Raytheon, effectively banning them from all activities in China.
The Chinese authorities "have decided to include Lockheed Martin Corporation and Raytheon Missiles & Defense, (a subsidiary of Raytheon Technologies) which participated in the sale of arms to Taiwan, in the list of unreliable entities", reads a statement released by the Ministry of Chinese trade. The move aims to isolate the island claimed by Beijing as an "inalienable" part of its territory.
Furthermore, as early as February 2022 Beijing had imposed sanctions against US manufacturers Lockheed Martin and Raytheon, again because they were involved in arms sales to Taiwan.
The measures come amid rising tensions after the US military shot down what it said was a Chinese spy balloon, and a day after Beijing warned of "countermeasures against relevant US entities that undermine China's sovereignty and security". , commented Reuters .
All details.
THE NEW PROCEDURE OF BEIJING AGAINST LOCKHEED MARTIN AND RAYTHEON
The two American companies "are prohibited from carrying out import and export activities related to China" and are "prohibited from making new investments in China".
In addition, the provision includes a "ban on entry (into the country) to the executive personnel of the aforementioned companies", the cancellation and denial of "work, residence and residence permits of the aforementioned executive personnel in China"; the “imposition of fines (…) the amount of which is double the amount of each company's arms sales contract in Taiwan”.
Furthermore, in the note, the ministry indicates that if the payment of the fines is not made within 15 days from today, further sanctions will be adopted against the two companies.
However, Beijing's notice does not specify the amount.
EXACTLY ONE YEAR FROM THE FIRST
Last February, China announced sanctions on Raytheon and Lockheed Martin over a $100 million deal for the maintenance of Taiwan's missile defense systems by the two companies. It was the first application of the new Chinese legislation created to counter the policy of Western sanctions against Beijing.
China has announced sanctions against Lockheed and Raytheon on at least two previous occasions, in 2019 and 2020, although Beijing has not explained what those sanctions entail or how they are enforced.
THE SANCTIONS TO THE CEOS OF BOEING AND RAYTHEON
After that, Beijing fined the CEOs of US defense giants Raytheon and Boeing Defense last October over the largest US arms sales deal with Taiwan in nearly two years.
This was announced on October 16 by Foreign Ministry spokesman Mao Ning. However, he did not specify what the sanctions would be against Gregory Hayes, president and CEO of Raytheon Technologies, and Ted Colbert, president and CEO of Boeing Defense, Space and Security.
On Sept. 3, the Biden administration approved $1.1 billion in arms sales to Taiwan. The approved transfer package, the US State Department announced, includes 60 AGM-84L Harpoon Block II (Boeing) anti-ship missiles for 355 million and 100 Aim-9X Block II Sidewinder (Raytheon) air-to-air missiles for 85.6 million . In addition to 655.4 million for the extension of a contract for radar surveillance.
LM'S MILITARY SUPPLIES IN TAIWAN
Finally, as AP recalls, Lockheed Martin has supplied the Taiwan army with radar, helicopters and air traffic control equipment. Plays a role in the island's development of its own fighter jet and navy frigates.
THE CONSEQUENCES OF CHINA'S SANCTIONS ON LOCKHEED MARTIN AND RAYTHEON
It is not clear on a practical level what the provision implies, given that a series of very binding blocks on trade with China, including by Washington, had already been imposed on companies producing weapon systems, such as Lockheed Martin and Raytheon. Neither company sells defense products in China. But the United States is Taiwan's main supplier of military equipment, not forgetting that it is bound to supply weapons for the island's defense by a 1979 law.
EXPERT COMMENT
“It is a message for the United States, but also for domestic consumption, to demonstrate China's tough stance,” Dongshu Liu, an assistant professor specializing in China politics at the City University of Hong Kong, told Bloomberg . “The economic consequences may not be as strong as the political ones: those companies do not do business in China. They may face some limitations due to these new sanctions, but nonetheless it is largely politically symbolic."
Finally, this action "demonstrates that China's retaliation remains very focused and contained, in response to the US arms sale to Taiwan, which China has filed its protest over many times in the past," said Feng Chucheng, a Beijing-based partner of consultancy firm Plenum. "China is not arming its sanctions, which is consistent with China's longstanding policies."
“Naming two already sanctioned companies to the list for the first time actually shows that MOFCOM [China's Ministry of Commerce] wants to take it slow and experiment with how to implement the new unreliable entity list,” according to Andy Chen, senior analyst at the company. consulting based in Beijing Trivium China.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-la-cina-sanziona-di-nuovo-lockheed-martin-e-raytheon/ on Thu, 16 Feb 2023 15:34:51 +0000.