China Imposes Sanctions on Lockheed Martin and Raytheon

China has imposed new sanctions against Lockheed Martin (LMT) and Raytheon (RTX) in retaliation for their weapons sales to Taiwan.[0] The sanctions come in the wake of the US banning companies for their involvement in China's surveillance balloon program.[1] Shares of both companies dropped after the news was announced.[2]

The Chinese Ministry of Commerce released a statement where it announced that the two companies had been placed on the nation's “unreliable entities list”, which prohibits them from “engaging in import and export activities related to China”.[3] The companies are also subject to fines “twice the amount” of their arms sales to Taiwan dating back to September 2020, and their senior executives will be prohibited from entering and working in China.[4]

The US has long sold arms to Taiwan and is bound by the 1979 Taiwan Relations Act to provide the island nation with the means to defend itself.[5] This support for Taiwan has long irked China, which still claims Taiwan as its own.[5] Tensions between Beijing and Washington have further escalated after the US shot down a Chinese spy balloon off the coast of South Carolina earlier this month.[5]

In response, the US blacklisted six Chinese companies it linked to the balloon.[6] Among the companies are Beijing Nanjiang Aerospace Technology, China Electronics Technology Group Corporation 48th Research Institution, Dongguan Lingkong Remote Sensing Technology, Eagles Men Aviation Science & Technology Group, Guangzhou Tian-Hai-Xiang Aviation Technology, and Shanxi Eagles Men Aviation Science & Technology Group.[6]

The incident caused US Secretary of State Antony Blinken to delay a diplomatic visit to China.[7] It remains unclear what effect the sanctions might have on Lockheed Martin or Raytheon as the US has already barred most sales of weapons-related technology to China.[6] However, the defense contractors may have other civilian business in the country that could be impacted by the sanctions.[8]

It's also unclear if the latest sanctions will prevent a meeting between US Secretary of State Antony Blinken and Wang Yi, China’s top diplomat, on the sidelines of the Munich Security Conference this week.[8]

“It’s a message to the US, but also for domestic consumption – to demonstrate China’s tough position,” said Dongshu Liu, an assistant professor specializing in Chinese politics at the City University of Hong Kong.[8]

0. “China Sanctions Lockheed Martin and Raytheon as Tensions Over Balloon Increase” The Wall Street Journal, 16 Feb. 2023, https://www.wsj.com/articles/china-puts-lockheed-raytheon-on-trade-blacklist-over-taiwan-arms-sales-5006c360

1. “China Blacklists Lockheed Martin, Raytheon Over Taiwan Arms Sales” Investor's Business Daily, 16 Feb. 2023, https://www.investors.com/news/china-blacklists-lockheed-martin-raytheon-over-taiwan-arms-sales/

2. “China Hits Back at US with Sanctions on Lockheed, Raytheon” msnNOW, 16 Feb. 2023, https://www.msn.com/en-us/money/markets/china-hits-back-at-us-with-sanctions-on-lockheed-raytheon/ar-AA17ymre

3. “China puts Lockheed, Raytheon on trade blacklist over arms deals with Taiwan – Washington Business Journal” The Business Journals, 16 Feb. 2023, https://www.bizjournals.com/washington/news/2023/02/16/lockheed-martin-raytheon-china-sanctions-taiwan.html

4. “Beijing Sanctions US Defense Companies Amid Fallout From Chinese Spy Balloon” The Epoch Times, 16 Feb. 2023, https://www.theepochtimes.com/beijing-sanctions-us-defense-companies-amid-fallout-from-chinese-spy-balloon_5062518.html

5. “Why did China impose sanctions on US arms manufacturers?” Quartz, 16 Feb. 2023, https://qz.com/china-sanctions-raytheon-lockheed-martin-1850124249

6. “China sanctions Lockheed Martin, Raytheon over Taiwan arms sales” Al Jazeera English, 16 Feb. 2023, https://www.aljazeera.com/news/2023/2/16/china-sanctions-lockheed-martin-raytheon-over-taiwan-arms

7. “China sanctions Lockheed Martin, Raytheon Missiles and Defense” UPI News, 16 Feb. 2023, https://www.upi.com/Top_News/World-News/2023/02/16/santions-raytheon-lockheed-martin-balloon/8101676569445/

8. “China hits back at US with sanctions on Lockheed Martin, Raytheon” The Straits Times, 16 Feb. 2023, https://www.straitstimes.com/asia/east-asia/china-hits-back-at-us-with-sanctions-on-lockheed-martin-raytheon