The United States and China, two of China’s largest state-owned enterprises, Cnooc Ltd. and Cosco Shipping Holdings Co., have been blacklisted by the US government. The decision, announced via a Federal Register filing on Tuesday, identifies these companies as Chinese military firms due to alleged links with the People’s Liberation Army (PLA).
The blacklist, compiled by the Pentagon, also includes tech giant Tencent Holdings Ltd. and battery manufacturer Contemporary Amperex Technology Co. Ltd. The inclusion of these major corporations marks a continuation of the US strategy to counter China’s military and economic ambitions.
The announcement triggered immediate market reactions, with Cosco’s shares falling by as much as 4.1% in Hong Kong, and Cnooc’s shares dropping by up to 1.5%. Both companies declined to issue immediate comments regarding the development.
The financial impact on Cosco and Cnooc was felt swiftly, reflecting investor concerns about potential future sanctions and reduced business opportunities, particularly with US companies that may now be hesitant to engage with them. The broader implications for their global operations remain to be seen, but analysts anticipate increased scrutiny and potential disruptions in international dealings.
Both Cnooc and Cosco have previously been in the crosshairs of US sanctions. In 2019, Cosco faced sanctions for transporting Iranian oil in violation of US sanctions against Iran. Although those penalties were lifted in 2020, the company’s operations remained under close watch.
Cnooc, one of the earliest Chinese state-owned enterprises to face US sanctions, was added to a Pentagon blacklist in 2021. These moves were part of broader US efforts to limit China’s influence and curb its access to sensitive technologies and resources.
The designation as military-linked firms comes amid a broader US strategy to decouple its economy from China, particularly in sectors deemed critical to national security.
Being on the blacklist itself does not impose immediate legal penalties but serves as a warning to US firms, discouraging them from doing business with these companies. This could result in a significant decrease in collaborations and partnerships, affecting the companies’ revenues and global strategies.
In addition to Cnooc and Cosco, two major Chinese shipbuilders, China State Shipbuilding Corp. and China Shipbuilding Trading Co., were also added to the list. This expands the scope of US scrutiny over China’s maritime capabilities, which are critical components of the PLA’s strategic operations.
The inclusion of Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd. indicates that the US is broadening its focus beyond traditional industries such as shipping and oil. Tencent, known for its vast digital ecosystem, and Contemporary Amperex Technology, a key player in the electric vehicle battery market, represent sectors where China is seeking to achieve global leadership.
The blacklist is part of a series of measures aimed at countering China’s growing technological and military capabilities. This move is likely to exacerbate existing tensions between the two superpowers, which have already been strained by trade wars, technological competition, and conflicting geopolitical interests.
China has yet to formally respond to the latest blacklist, but past incidents suggest that retaliation could be forthcoming. The Chinese government has often accused the US of unjustly targeting its companies and interfering in its domestic affairs.
Potential retaliatory measures could include reciprocal actions against US firms operating in China or increased regulatory hurdles for American businesses. The situation could further escalate the ongoing trade and technology disputes, impacting global markets and supply chains.
The blacklisting of major Chinese companies also sends ripples through global markets. Companies like Cosco play critical roles in global shipping and logistics, while Cnooc is a significant player in the energy sector. Disruptions to their operations could have wide-ranging effects on international trade and energy markets.
Furthermore, the inclusion of high-tech firms like Tencent and Contemporary Amperex Technology reflects the US’s intention to limit China’s advancement in critical technologies. This could reshape global supply chains, particularly in the tech and automotive industries.
