China Imposes Sanctions on Lockheed Martin and Raytheon Technologies Over Arms Sales to Taiwan
Tensions between the United States and China have been escalating in recent weeks, with the latest move coming Thursday when China imposed sanctions on Lockheed Martin Corp. (NYSE: LMT) and an arm of Raytheon Technologies Corp. (NYSE: RTX) over arms sales to Taiwan.
The two companies have been placed on China’s “unreliable entities list,” which prohibits them from “engaging in import and export activities related to China,” according to the Chinese Ministry of Commerce. Both companies will receive fines “twice the amount” of their arms sales to Taiwan from September 2020, and the senior executives of these companies will not be allowed to enter or work in China.
At a time of increased friction between the US and China due to the balloon occurrence, the action has been taken. The US Commerce Department recently restricted six Chinese companies that it said were tied to the Chinese army’s aerospace program from obtaining US technology without government authorization. The Chinese government maintains that the balloon discovered in the airspace of the United States was a civilian research aircraft which had been blown off its intended course unintentionally.
Previously, Beijing imposed sanctions on two companies due to their arms sales to Taiwan, but they did not clarify the exact penalties or how they would be implemented. The Chinese Communist Party considers Taiwan, which it has never ruled, to be an integral part of its territory.
The exact effects of the sanctions on arms manufacturers remain unclear, as the U.S. has already prohibited the sale of weapons technology to China. Both companies are prohibited from making new investments in China and engaging in trade and business.
The US has since accused China of overseeing an international aerial surveillance program, which Beijing has denied. Washington has since blacklisted six companies reportedly involved in the program.
The incident caused US Secretary of State Antony Blinken to delay a diplomatic visit to China. It’s unclear if the latest sanctions will prevent a meeting between Blinken and Mr Wang Yi, China’s top diplomat, on the sidelines of the Munich Security Conference this week.
The sanctions come amid a battle over access to key cutting-edge technologies like the escalating semiconductor war, and could have serious economic implications for the two countries.
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