US hits Chinese companies, individuals over South China Sea spat

The United States has blacklisted 24 Chinese companies and targeted individuals it said were part of construction and military actions in the South China Sea, its first such sanctions against Beijing over the disputed strategic waterway.

Those actions came amid reports that China launched missiles into the South China Sea as military tensions between the world’s two largest economies rise.

The US Commerce Department said on Wednesday the two dozen companies played a “role in helping the Chinese military construct and militarise the internationally condemned artificial islands in the South China Sea”.

Separately, the State Department said it would impose visa restrictions on Chinese individuals “responsible for, or complicit in”, such action and those linked to China’s “use of coercion against Southeast Asian claimants to inhibit their access to offshore resources”.

The companies blacklisted included Guangzhou Haige Communications Group, several firms that appear to be related to the China Communications Construction Co (CCCC), as well as Beijing Huanjia Telecommunication, Changzhou Guoguang Data Communications, China Electronics Technology Group Corp and China Shipbuilding Group.

It was the latest US move to punish firms whose goods may support Chinese military activities and comes in the run-up to the November 3 US election, in which both President Donald Trump and rival Joe Biden have been sharply critical of China.

The Trump administration has been involved in a trade war with China since 2018, barred Chinese telecommunications giant Huawei from accessing US technology and the two countries have closed down some consulates in each other’s cities amid several disputes.

Troubled waters

The US accuses China of militarising the South China Sea and trying to intimidate Asian neighbours who might want to exploit its energy and fishing reserves.

US warships have gone through the area to assert the freedom of access to international waterways, raising fears of clashes.

A spokesperson for China’s embassy in Washington, DC, condemned the US sanctions as “completely unreasonable”, and urged the US to reverse them.

“[South China Sea Islands are] an integral part of China’s territory, and it is fully justified for us to build facilities and deploy necessary defence equipment there,” the spokesperson said.

“The Chinese government has firm determination to safeguard its sovereignty and territorial integrity.”

A US defence official, speaking on condition of anonymity, told the Reuters news agency China had on Wednesday launched four medium-range ballistic missiles that hit the South China Sea between Hainan Island and the Paracel Islands.

The official added that an assessment was under way to determine the type of missile launched.

The Hong Kong-based South China Morning Post newspaper quoted a source close to the Chinese military as saying China had launched two missiles, including an “aircraft carrier killer”, into the South China Sea on Wednesday morning in a warning to the US.

China complained that the US had sent a U-2 reconnaissance plane into a no-fly zone over Chinese live-fire military drills on Tuesday.

War of words

The Pentagon said a U-2 flight conducted in the Indo-Pacific region was “within the accepted international rules and regulations governing aircraft flights”.

In July, Washington said it could sanction Chinese officials and enterprises involved in coercion in the South China Sea after it announced a tougher stance rejecting Beijing’s claims to offshore resources there as “completely unlawful”.

China claims virtually all of the potentially energy-rich South China Sea, but Brunei, Malaysia, the Philippines, Taiwan and Vietnam also lay claim to parts of an area through which about $3 trillion of trade passes each year.

“This is the first time the US has levied any type of economic sanction against Chinese entities for behaviour in the South China Sea,” said Greg Poling, a South China Sea expert at the US-based Center for Strategic and International Studies.

“It probably doesn’t make much impact on those entities directly – I doubt that there is much CCCC needs to buy from the US that it can’t get from other suppliers. And these certainly aren’t the financial sanctions that some might have expected … But it could be a start at trying to convince Southeast Asian partners that the new policy is more than just rhetoric.”

Messages left with CCCC, a transport and infrastructure conglomerate, the Shanghai Cable Offshore Engineering Co Ltd, an engineering company that specialises in submarine cables, and Guangzhou Haige Communication Group, which manufactures communications equipment, were not immediately returned after business hours in China. Several other firms on the list could not immediately be reached or could not immediately be located.

The Commerce Department said it was adding the 24 firms to its “entity list”, which restricts sales of US goods shipped to them and some more limited items made abroad with US content or technology. Companies can apply for licenses to make the sales, but they must overcome a high bar for approval.

The State Department did not name those subject to visa bans, but a senior department official told reporters “dozens” would be affected. A senior Commerce Department official said US exports to the Chinese companies targeted had been relatively small – about $5m in the last five years.