The US Commerce Department said on Wednesday that is adding 37 Chinese companies and schools to a red-flag list of ‘unverified’ entities that US companies should treat with caution, according to a notice in the Federal Register.
The list, which takes effect on Thursday, also includes six organizations in Hong Kong, four in the United Arab Emirates, two in Malaysia and one in Indonesia.
One company on the list is the Aisin Nantong Technical Center, a Chinese subsidiary of a Japanese auto parts manufacturer. Another is Beijing Bayi Space LCD Materials Technology Co Ltd, which has received patents for high-end screen technology.
Several other of the companies named specialise in precision optics, electronics, machine tools or aviation, according to a Reuters report.
The listing means that the US companies will treat the organisations with caution, said Kevin Wolf, a former assistant secretary of commerce for export administration.
China’s commerce ministry, when asked on Thursday about its response, said it opposed abuses of national security and export control rules, adding the US action has smeared Chinese firms and disrupted normal trade flow.
The US government should correct its “wrong” behaviour by removing the relevant Chinese companies from the list as soon as possible, ministry spokesman Gao Feng told reporters in a regular briefing in Beijing.
Being put on an ‘unverified’ list means that US suppliers to the unverified companies and schools can no longer use license exceptions to, for example, sell products to repair goods that were sold previously but instead will have to get a new license, said Wolf, now at the law firm Akin Gump.
“Even though it’s not an embargo, because of the hassle sometimes suppliers will treat it as an embargo. It has a practical effect that’s greater than the legal effect,” said Wolf.
The Commerce Department will put entities on the ‘unverified’ list if the organisations decline to answer questions about how US goods are used.
Schools on the list include the Changchun Institute of Applied Chemistry, whose website says it specialises in physics and chemistry research aimed at defence and economic development as well as training graduate students.
Other schools on the list are the Guangdong University of Technology in Guangzhou, Renmin University, Tongji University in Shanghai and two schools in Xi’an, China.
The listing also removes five Russian companies, three Chinese entities and one Finnish firm from the list.