In a significant escalation of the ongoing tech and defense trade dispute, China has imposed sanctions on 10 American military-related companies. This move comes in response to recent U.S. restrictions that bar leading Chinese tech companies from defense contracts. The sanctions, announced by China’s Commerce Ministry, include a ban on exporting dual-use items to the targeted firms, which encompass military drone makers and companies involved in rare earth mining.
The dual-use designation refers to goods that can serve both military and non-military purposes. China’s Commerce Ministry justified the export ban as a measure to safeguard national security and a response to what it termed the U.S. government’s wrongful expansion of its so-called List of Chinese Military Companies. Additionally, China’s Finance Ministry prohibited government entities from purchasing products from 46 American companies, including major defense contractors like Lockheed Martin, Raytheon, and General Dynamics.
China’s Response to U.S. Sanctions
Earlier this month, the U.S. Defense Department added several Chinese tech companies, including Alibaba and Baidu, to its list of firms with alleged links to the Chinese military. Baidu vehemently denied these claims, calling them totally baseless. The U.S. designation prevents these companies from securing military contracts. China’s Commerce Ministry had previously criticized the American sanctions, stating they contradicted the consensus reached between Chinese leader Xi Jinping and U.S. President Donald Trump during Trump’s visit to China in May.
In its latest announcement, the Commerce Ministry emphasized that companies or individuals in third countries are prohibited from transferring dual-use items from China to the sanctioned American firms. However, it also noted that Chinese companies could apply for export approval for goods deemed genuinely necessary.
The Targeted U.S. Companies
The 10 U.S. companies affected by China’s sanctions are AVEOX in Simi Valley, California; Red Cat Holdings and Teal Drones, both in South Salt Lake, Utah; IMSAR in Springville, Utah; Jaia Robotics in Bristol, Rhode Island; Ball Aerospace & Technologies in Broomfield, Colorado; Oshkosh Defense in Oshkosh, Wisconsin; L3Harris Maritime Services in Norfolk, Virginia; MP Materials in Las Vegas; and USA Rare Earth in Stillwater, Oklahoma.
This latest round of sanctions marks a significant escalation in the U.S.-China tech and defense trade confrontation. The measures combine export curbs on American military-linked firms with a broader government procurement ban covering 46 U.S. companies. The ongoing dispute highlights the complex and intertwined nature of global trade and the strategic importance of dual-use technologies.
