U.S. Expands Sanctions Targeting Chinese Technology Companies
Last week, the Treasury Department and Commerce Department imposed new sanctions on dozens of Chinese firms linked to the Chinese military.
Pursuant to Executive Order 13959, as amended by E.O. 14032, the Treasury Department’s Office of Foreign Assets Control (OFAC) sanctioned eight additional Chinese companies for operating as part of the Chinese Military-Industrial Complex (CMIC) and supporting human rights abuses against the Uyghur population in Xinjiang under China’s biometric surveillance apparatus. The Commerce Department’s Bureau of Industry (BIS) imposed corresponding Entity List sanctions on 34 parties in China and six companies in other countries.
The following Chinese technology companies were added to OFAC’s “Non-SDN Chinese Military-Industrial Complex Companies List” (“NS-CMIC List”):
- Cloudwalk Technology Co., Ltd.;
- Dawning Information Industry Co., Ltd.;
- Leon Technology Company Limited;
- Megvii Technology Limited;
- Netposa Technologies Limited;
- SZ DJI Technology Co., Ltd.;
- Xiamen Meiya Pico Information Co., Ltd.; and
- Yitu Limited.
The NS-CMIC sanctions restrict the ability of U.S. persons to purchase or sell publicly traded securities or derivatives in the above entities. Note that the 50 percent rule does not apply to entities on OFAC’s NS-CMIC List, meaning that only named entities are subject to these restrictions.
Of the 40 new entries to BIS’s Entity List, 34 pertain to entities located in China, three to entities located in Georgia, one to an entity located in Malaysia, and two to an entity located in Turkey, with three of the entities being located in multiple destinations. The eight Chinese firms listed above are on BIS’s Entity List, and the final rule adds the following four Chinese entities previously identified under E.O. 13959:
- Aerosun Corporation;
- Changsha Jingjia Microelectronics Company Limited;
- Fujian Torch Electron Technology Co., Ltd.; and
- Inner Mongolia First Machinery Group Co., Ltd.
Citing national security and foreign policy concerns, BIS’s Entity List additions target an array of firms determined to have made efforts to support the modernization and enhancement of Chinese and Iranian military capabilities. Such efforts include the purported use of biotechnology processes to support China’s development of brain-control weaponry, as well as the actual or attempted provision of U.S.-origin items to China and Iran. Notably, BIS’s final rule also revises Huawei Technologies Co., Ltd.’s entry to add three additional aliases under one of its affiliated entities, Huawei Marine Networks:
- HMN Technologies;
- Huahai Zhihui Technology Co., Ltd.; and
- HMN Tech.
U.S. and non-U.S. exporters are generally prohibited from transferring goods, software, or technology subject to the U.S. Export Administration Regulations to listed entities without first obtaining a U.S. export license. BIS will review such requests under a “presumption of denial” licensing policy.
Please contact our sanctions and export control team with any questions about ensuring compliance with these latest developments.