The US drafts a list with Chinese companies believed to have military ties

By: Miguel A. Rodriguez

15:39, 23 November 2020

The US is looking to ban exports to 89 Chinese entities

The Sino-US tensions are well-known globally. From an economic battle to the Hong Kong situation and companies tied with mainland China’s administration, the two countries cannot seem to find common ground.

According to Reuters, a list of Chinese companies has been put together by the Trump administration to show their military ties. According to the list’s draft, the mentioned companies will be restricted from purchasing various US goods and technology.

The list includes the Commercial Aircraft Corp of China Ltd (COMAC), which is fighting to reach the same level as Boeing and Airbus, and Aviation Industry Corporation of China (AVIC) and its related entities.

Zhao Lijian, the Chinese Foreign Ministry spokesman stated that “Chinese companies have always operated in accordance with the law and strictly follow local laws and regulations when operating overseas, including in the United States.” The previously mentioned companies are believed to be “military end users,” which means that they must have a license to operate, but usually, such permits are instead denied than granted.

But this situation impacts not only the Chinese companies but also the American ones such as Boeing, General Electric, and Honeywell. The first is looking to receive China’s approval for its 737 MAX after last week it received clearance from the US regulators. On the other hand, a General Electric spokesperson stated that the company operates according to all laws and even has a license related to military end users.

Overall, the list includes 117 companies, and while 89 are Chinese, the rest are Russian entities. Out of the rest, Irkut is looking to break into the aviation industry with its MC-21 jetliner and become a Boeing’s competitor like COMAC.

Despite the news, General Electric stock price gained 1.23% in pre-market trading, while Honeywell went up 0.21%.

Sources: reuters.com, finance.yahoo.com

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This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided.