China threatens to counter TikTok ban by imposing sanctions on US companies

China threatens to counter TikTok ban by imposing sanctions on US companies

According to communications from the Chinese government, it has launched a mechanism enabling it to restrict foreign entities, a much-anticipated move seen as retaliation to US penalties against Chinese companies such as telecom giant Huawei and sanctions on popular Chinese apps TikTok and WeChat.

An announcement by the Ministry of Commerce did not mention any specific foreign entities, but broadly spelled out the factors that could trigger punitive measures, which may include fines, restrictions on import-export business or investment in China, and the entry of personnel or equipment into the country. It covers “foreign enterprises, other organisations and individuals”, it said.

The launch of the “unreliable entities list” by Beijing ups the ante in the escalating commercial fight with the Trump administration, which has used its own “entity list” to bar Huawei from the US market on national security grounds.

The announcement also came a day after the United States ordered a ban on downloads of popular video app TikTok and effectively blocked the use of the Chinese super-app WeChat on similar grounds, which prompted a threat by China to strike back.

The language used by Beijing to denounce US sanctions against Chinese companies – “Beijing would consider sanctions on entities whose activities harm China’s national sovereignty, security, and development interest or violate internationally accepted economic and trade rules”.

The Chinese ministry said that if an entity is suspected of violating the provisions, an investigation would be launched under China’s cabinet, the State Council.

The foreign party in question would have an opportunity to defend its conduct to the Chinese investigators.

Chinese enterprises that rely on business with the targeted organisations also will be allowed to apply for exemptions from any ban on doing business with them, as the US system allows.

The United States and China are engaged in an escalating trade battle centring on technology.

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