The administration of US President Joe Biden is raising red flags about 33 Chinese companies whose legitimacy it cannot verify, imposing new restrictions on their ability to receive shipments from US exporters and requiring extra diligence from US companies that want to do business with them.
The US Department of Commerce on Monday said that it was adding the companies to what is known as the “Unverified List,” a roster of businesses worldwide that are subjected to stricter export controls because US officials have been unable to do customary checks.
“The ability to verify the legitimacy and reliability of foreign parties receiving US exports through the timely completion of end-use checks is a core principle of our export control system,” US Assistant Secretary for Export Enforcement Matthew Axelrod said in a statement.
He added that the addition of 33 parties in China to the Unverified List “will assist US exporters in conducting due diligence and assessing transaction risk, and signal to the PRC government the importance of their cooperation in scheduling end-use checks.”
The announcement follows a speech last week by FBI Director Christopher Wray in which he said the bureau was opening investigations related to Chinese intelligence operations about every 12 hours and warned that there was “no country that presents a broader threat to our ideas, innovation and economic security than China.”
China has repeatedly rejected accusations from the US government, saying Washington has made groundless attacks and malicious smears.
The commerce department’s action puts US exporters on notice that they would now need a license if they want to ship products to any of the companies on the list. It alerts the flagged companies that they must certify that they are legitimate and willing to comply with US regulations to continue receiving shipments.
The move is meant to advise China that it must permit US checks and inspections of the companies if it wants them to come off the list.
The commerce department conducts checks of some foreign companies, or “end-users,” that receive shipments from the US to ensure that the companies exist and are legitimate businesses, and that the products are being used for the stated purposes.
That is especially a concern in China, where products seemingly meant for commercial use wind up diverted for military purposes.
The checks are typically coordinated with the Chinese government. When the US is unable to conduct a check, or unable to verify a company’s legitimacy, the company can then be added to the Unverified List.
It can come off the list by agreeing to a check and establishing that it is a legitimate business.
Most of the companies flagged on Monday are electronics businesses, but they also include optics companies, a turbine blade company, state laboratories at universities and other businesses.
The addition of the 33 Chinese companies brings the total number of listed entities to about 175.
Other nations with companies on the Unverified List include Russia and the United Arab Emirates.
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