U.S. Commerce Targets 28 Chinese Entities who cannot Receive US Origin Goods, Citing Alleged Ties to Iranian Military

Biden administration imposes export restrictions as it sees a growing national-security threat from China

· Commerce’s entity listings restrict sales to targeted firms unless exporters secure a license from the U.S. government.

The U.S. Commerce Department on Thursday targeted more than two dozen Chinese entities with export restrictions, part of a broader effort by the Biden administration to mitigate what it says is a growing national security threat from China.

In adding the 28 Chinese firms and individuals to its Entity List, Commerce’s Bureau of Industry and Security said the firms represented a range of potential national security risks including through alleged dealings with an Iranian electronics firm previously sanctioned by the U.S. for its alleged ties to Tehran’s military.

The listings are designed to prevent U.S. goods from being used by entities Washington believes are a potential threat to Western interests.

The move comes amid rising diplomatic tensions between the world’s two largest economies. China’s dealings with Western foes Russia and Iran and the recent discovery of China’s suspected surveillance balloon program are fueling calls for the Biden administration to more forcefully levy its sanction authority and tighten restrictions on trade and investment between the two powers.

Unlike Treasury sanctions, which prohibit any business and financial dealings with targets of sanctions, Commerce’s entity listings restrict sales to targeted firms unless exporters secure a license from the U.S. government. As such, they are often viewed by analysts and industry officials as a more lenient punitive measure than sanctions.

Other security threats cited by Commerce include alleged contributions to Pakistan’s ballistic missile program and provision of surveillance equipment to Myanmar’s sanctioned military, accused of widespread human-rights abuses.

Those added to the Entity List included subsidiaries of Chinese genetics company BGI, cloud-computing company Inspur Group, airfreight company AIF Global Logistics Co. and several electronics firms.

The companies and the Chinese embassy in Washington didn’t immediately respond to requests for comment. Officials in Beijing have repeatedly denounced U.S. sanctions as illegal.

The administration has faced recent criticism from some lawmakers and former officials for its handling of banned trade and finance flows through China, including evidence that Chinese government-owned or -controlled companies were dealing directly with sanctioned Russian defense firms. Russian trade data show China as a primary channel for many of the prohibited exports that the U.S. says Russia’s military needs to keep its war machine running.

The Biden administration has levied sanctions against many Chinese companies and individuals, but some lawmakers say it hasn’t hit Beijing hard enough with additional actions.

Rep. Michael McCaul (R., Texas), who heads the House Foreign Affairs Committee, on Tuesday took aim at the Commerce Department’s decision to approve billions of dollars in goods sold to Chinese firms that were identified by the U.S. government as potential national-security risks. Tech industry officials say most of those sales don’t constitute the most advanced technology.

“It is absolutely astounding [the Commerce Department’s Bureau of Industry and Security] approved more than $23 billion worth of licenses to sell U.S. technology to blacklisted companies based in China,” Mr. McCaul told senior administration officials testifying before the committee.

Meanwhile, U.S. officials have repeatedly warned in recent days that China faces “real costs” if it steps up its support for Russia, promising to tackle national security risks arising from trade.

China’s challenge “to U.S. national security and foreign policy interests is real,” Alan Estevez, undersecretary of commerce for Industry and Security, told the House committee. He said his priority “is to ensure we are appropriately doing everything…to prevent sensitive U.S. technologies from getting into the hands of the military, intelligence, security services, or other parties” in China.

As Beijing allegedly considers providing what U.S. officials say is lethal aid to Russia to help its war effort in Ukraine, some industry officials and analysts say the administration appears to be holding back from levying more aggressive sanctions so as not to provoke China.

“But Washington should not wait for Beijing to send lethal aid before acting,” said John Hardie, deputy director of the Russia Program at the Washington-based think tank the Foundation for Defense of Democracies. “Many Chinese companies have engaged in sanctionable activity by providing other sorts of support to Russia’s war machine, but Treasury has designated only a fraction of them,” he said. “That should change.”