The Trump administration is determined to block chipmaker, Semiconductor Manufacturing International Corp. (SMIC) and China National Offshore Oil Corp. (CNOOC) from American investment due to military ties, as per reliable reports. Apparently, this move is U.S’s latest swipe at Beijing before USA’s new President-elect, Joe Biden takes charge.

It has been reported that SMIC and CNOOC are among four Chinese companies to be included in a list of firms owned or controlled by the military. Their addition, coupled with China International Engineering Consulting Corp. and China Construction Technology Co. Ltd. makes total number of firms on the blacklist as 35. However, the Defense Department has not disclosed the date for publishing the new list in Federal Register.

Commenting on the matter, Sengyick Tee, an analyst with SIA Energy has stated that the company will be significantly impacted as the oil and gas value chain comprises of numerous U.S. companies from upstream and mid-stream all the way to the gas side. Tee further stated that this this move will restrict them from procuring parts and software from U.S. companies.

President Donald Trump, from Republican party, has been taking punitive actions against China despite losing the U.S. presidential election to Biden, a Democrat. The actions are anticipated to create difficulties for the next administration for curbing tensions with Beijing, however, they are also likely to give more leverage to the U.S. in future negotiations.

According to an executive order released this month, the U.S. has stated that China has been exploiting its capital for development and modernization of its military, intelligence, and other security equipment, creating a threat to the U.S. The order restrains investment firms and pension funds from investing in 31 Chinese companies designated by the Pentagon for having military ties since June.

Responding to the previous order, Chinese Foreign Ministry has apparently accused the U.S. of defaming its military-civilian integration policies and has vowed to protect the country’s companies. Urging the withdrawal of the order, the ministry spokesperson, Wang Wenbin has stated that this order harms the legitimate rights and interests of Chinese companies along with those of foreign investors including U.S. ones.

Source credit: https://www.bloomberg.com/news/articles/2020-11-30/u-s-to-add-china-s-smic-cnooc-to-blacklist-reuters-says