China sanctions Lockheed Martin, Raytheon over Taiwan sales
February 16, 2023
China imposed trade and investment sanctions on Lockheed Martin and a unit of Raytheon on Thursday, saying the step was because of them supplying weapons to Taiwan.
Beijing has been stepping up efforts to isolate the island democracy that it claims as part of Chinese territory.
China's bilateral ties with the US have also been strained of late amid the shooting down of several balloons which the US says are conducting espionage operations.
Lockheed Martin and Raytheon Missiles and Defense, part of the broader Raytheon Technologies Corp., were added to the "unreliable entry" list of companies whose activities are restricted because they might endanger national sovereignty, security or development interests.
What measures do the US armaments manufacturers face?
China's Ministry of Commerce announced the sanctions and said that there would be five main areas of impact:
- The companies would be forbidden from importing and exporting to or from China.
- They would not be allowed to make new investments in China.
- Their senior management personnel would not be permitted entry to China.
- Senior management personnel already in China would lose their work permit or stay or residence qualifications.
- The two companies would also be fined a sum that would be double the amount of each company's sales to Taiwan.
It's not clear quite how large an impact these restrictions will have on the two companies in practice.
The US bars the sale of most weapons-related technologies to China, meaning their core operations should not be affected very much. But some military contractors also have civilian businesses, in sectors like aerospace and other markets, that are subject to fewer restrictions.
US military support for Taiwan is nothing new
The US has no formal ties with Taiwan, as it adheres to the "one China" principle that Beijing demands of all its trade partners, namely that they do not recognize Taiwan officially as a country.
However, the US treads a fine line on this distinction, simultaneously maintaining its position as Taiwan's main international commercial partner and military supplier.
Washington has been Taiwan's most important partner more or less ever since the 1949 civil war between China's Communist Party and the country's previous nationalist rulers, who ultimately fled to Taiwan and established themselves there.
A law in the US also obligates the government to ensure Taiwan has the means to defend itself.
Raytheon Missiles and Defense was awarded a $412 million (roughly €385 million at today's exchange rate) contract in September to upgrade Taiwanese military radar as part of a broader US investment package of more than $1 billion for Taiwan's military.
Lockheed Martin has supplied Taiwan's military with radar, helicopters and air traffic control equipment. It also supplies Taiwan with the F-16 multirole combat jets that are the backbone of its air force, and a delivery of new-build F-16s is currently planned, slated for potential 2026 delivery.
China's sanctions come a few weeks after the US blocked export license renewals for telecommunications giant Huawei, citing its pursuit of "technology hegemony."
And they also coincide with the US having shot down several balloons that is says are part of a Chinese espionage network.
On Thursday, the foreign affairs committee of China's National People's Congress responded critically to a US Congress resolution on the balloons, saying the text "deliberately exaggerated the 'China threat.'"
Calling the document "purely malicious hype and political manipulation," it said some US Congress politicians "fanned the flames, fully exposing their sinister designs to oppose China and contain China."
Taiwan's military, meanwhile, on Thursday said that it had found the remains of a crashed weather balloon on a remote and strategically located island near the Chinese coast, saying it appeared to be of Chinese making. On Tuesday, Taiwan's Defense Ministry had said it had not spotted any surveillance balloons from China in its vicinity.
msh/rs (AP, dpa)