China restricts exports to U.S. defense firms
BEIJING — China imposed sanctions Monday on 10 American military-related companies, blocking Chinese exporters from supplying them with “dual-use” goods in the latest sign that the rivalry between the world’s two largest economies is hardening around defense technology, critical minerals and advanced manufacturing.
The restrictions target firms including drone makers, defense contractors and rare earth companies, among them AVEOX, Red Cat Holdings, Teal Drones, IMSAR, Jaia Robotics, Ball Aerospace & Technologies, Oshkosh Defense, L3Harris Maritime Services, MP Materials and USA Rare Earth. China’s Commerce Ministry said the move was intended to protect national security and respond to what it called Washington’s expansion of a list of Chinese companies linked to the military.
Dual-use items can have both civilian and military applications, making them a central battleground in U.S.-China competition over semiconductors, drones, artificial intelligence systems and minerals needed for high-tech production. China also said companies and individuals in third countries are barred from transferring Chinese-origin dual-use goods to the sanctioned U.S. firms, though Chinese companies may seek approval for exports deemed “genuinely necessary.”
Separately, China’s Finance Ministry barred government entities from buying products from 46 American companies, including units of Lockheed Martin, Raytheon and General Dynamics, according to the AP report. The ministry gave no detailed public explanation for that procurement ban.
A broader tech fight
The Chinese measures followed a U.S. Defense Department update earlier this month identifying companies it says qualify as “Chinese military companies” operating in the United States under Section 1260H. The Pentagon document says the listed entities are engaged in commercial services, manufacturing, production or exports while operating directly or indirectly in the United States.
U.S. media reports said the updated list included major Chinese technology and manufacturing names such as Alibaba, Baidu, BYD, WuXi AppTec, Unitree and semiconductor firms. The designation does not amount to a full financial sanction, but it restricts access to U.S. defense business and can damage companies’ reputations with investors and commercial partners.
The sanctions are expected to have limited immediate commercial impact on many of the targeted U.S. companies because several have little direct exposure to Chinese government procurement or mainland markets. But analysts say the move underscores Beijing’s willingness to answer U.S. technology controls with its own pressure points, especially in sectors where China holds leverage, including rare earths and supply-chain inputs used in electronics, defense and clean-energy equipment.
The exchange adds another layer of uncertainty to a relationship that officials in both countries have sought at times to stabilize, even as trade, security and technology disputes continue to overlap. For companies caught between the two governments, the practical effect may be less about immediate lost sales than a warning that defense-linked supply chains are increasingly exposed to political retaliation.
