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The US Department of Defense has placed COSCO Shipping Corp. Ltd along with China National Offshore Oil Corp. and other entities on its list of companies supposedly supporting the Chinese militia
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The DOD determined that the entries listed in the notice qualify as ‘Chinese military companies’
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COSCO said it was seeking clarification on the matter
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The designation does not impose sanctions or export controls, and global operations continue uninterrupted, COSCO said
The US Department of Defense (DOD) blacklisted COSCO Shipping Corp. Ltd, China Cargo Airlines, China National Offshore Oil Corp. and other entities, placing them on a list of companies operating in the US supposedly as Chinese military companies.
The blacklist comes with no direct penalties but could deter US firms from engaging with the named entities and signals intensified scrutiny of China’s dominant maritime sector.
In a notice filed this week, the US Deputy Defense Secretary determined that the entries listed in the notice qualify as “Chinese military companies.”
These are companies said to be involved in providing commercial goods or services that back the People’s Liberation Army or its associated organizations.
“Updating the Section 1260H list of “Chinese military companies” is an important continuing effort in highlighting and countering the People’s Republic of China’s (PRC) Military-Civil Fusion strategy. The PRC’s Military-Civil Fusion strategy supports the modernization goals of the People’s Liberation Army (PLA) by ensuring it can acquire advanced technologies and expertise developed by PRC companies, universities, and research programs that appear to be civilian entities. Section 1260H directs the Department to begin identifying, among other things, Military-Civil Fusion contributors operating directly or indirectly in the United States,” the DOD said in a statement.
COSCO said it was seeking clarification on the matter.
In a statement, the Chinese container line stated that “COSCO Shipping and its subsidiaries have consistently adhered to local laws and regulations, maintaining strict compliance in all international operations.”
In the meantime, it is business as usual for COSCO, which said the listing will not affect its operations, while reaffirming its commitment to facilitating worldwide trade.
“This designation does not impose sanctions or export controls, and our global operations will continue uninterrupted,” COSCO said in a statement.
Market players said the action by the US reflects an escalation in US-China tensions, but the immediate impact on petroleum trading and shipping remain uncertain.
Traders are evaluating the situation as they wait for the installation of the new administration of president-elect Donald Trump on Jan. 20.
The situation could see a hike in VLCC rates, but is not expected to have a huge impact for now due to low trading volumes.
Companies also in the blacklist include China General Nuclear Power Corp., China National Chemical Corp. Ltd., China National Nuclear Corp., and China State Shipbuilding Corp. Ltd., among others.
The list comprises Chinese companies in the energy transition space, including battery manufacturer Contemporary Amperex Technology Co. Ltd. along with technology company Tencent Holdings Ltd.
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