China’s Ministry of Commerce on Monday announced sanctions against three US defense companies for selling arms to Taiwan, placing the companies on the “unreliable entities list.” According to a statement published by China’s State Council Information Office, the sanctioned companies are General Atomics Aeronautical Systems, General Dynamics Land Systems and Boeing Defense, Space & Security.
These companies will be banned from investing and engaging in import-export transactions with China. The sanctions also affect senior executives of the companies who will be banned from entering China and will have their work permits revoked. Additionally, China’s Ministry of Commerce decided to revoke visitor and residential status previously granted to those managers and added that any new applications for such status will be rejected.
The Ministry of Commerce took a set of other measures against Caplugs, an American company specializing in product protection accused of dodging sanctions by transferring products bought from China to companies on the unreliable entities list. Thus, authorities asked the company to take all the necessary measures to cease such actions and to submit all evidence to the office of the unreliable entities list. If it doesn’t comply, authorities will take additional legal measures against it.
The Ministry specified that it took these restrictive measures to “safeguard China’s national sovereignty, security and development interests”.
The unreliable entity list was established by MOFCOM Order No. 4, a Chinese regulation that became effective in September 2020. Its purposes are specified in Article 1 of the order, which includes the protection of China’s national interests, the interests of Chinese individuals and enterprises, and the preservation of fair and free international economic and trade order. The order allows authorities to take restrictive measures against any foreign entity whose actions are deemed to endanger “national sovereignty, security or development interests of China” or apply discriminatory measures against Chinese individuals or enterprises. If so, the foreign entity will be labeled an unreliable entity and be included in the list. According to Article 2 of the regulation, the term “foreign entity” includes any enterprise, organization, or individual of a foreign country.
The Ministry of Commerce announced the sanctions on the day of Taiwanese President Lai Ching-te’s inauguration. In Lai’s inaugural speech, the new president urged China “to cease their political and military intimidation against Taiwan, share with Taiwan the global responsibility of maintaining peace and stability in the Taiwan Strait as well as the greater region.” Nevertheless, the Chinese government considered Lai’s speech to be provocative and accused him of promoting separatism and “inciting confrontation” in the Taiwan Strait.
The announced sanctions are part of the rising tensions between China and Taiwan over the latter’s status. Whereas Taiwan considers itself a sovereign country called the Republic of China, China views the island as part of its territory and has vowed to unify Taiwan with the mainland.
This is the third time in the past year that China has imposed sanctions against companies for selling weapons to Taiwan. The first was in January 2024 when the Chinese Foreign Ministry froze the assets of five US defense manufacturers in China, and the second was in April 2024.
