China on Thursday imposed trade and investment sanctions on Lockheed Martin and a unit of Raytheon for supplying weapons to Taiwan, stepping up efforts to isolate the island democracy claimed by the ruling Communist Party as part of its territory.
Lockheed Martin Corp. and Raytheon Technologies Corp.’s Raytheon Missiles and Defense are barred from importing goods into China or making new investments in the country, the Ministry of Commerce announced. It said they were added to the “unreliable entity” list of companies whose activities are restricted because they might endanger national sovereignty, security or development interests.
It wasn’t clear what impact the penalties might have. The United States bars most sales of weapons-related technology to China, but some military contractors also have civilian businesses in aerospace and other markets.
Taiwan and China split in 1949 after a civil war. The island of 22 million people never has been part of the People’s Republic of China, but the Communist Party says it is obliged to unite with the mainland, by force if necessary.
President Xi Jinping’s government has stepped up efforts to intimidate Taiwan by flying fighter jets and bombers near the island and firing missiles into the sea.
The United States has no official relations with Taiwan but maintains extensive commercial and informal contacts. Washington is obligated by federal law to make sure the island’s government has the means to defend itself.
The United States is Taiwan’s main supplier of military equipment.
Raytheon Missiles and Defense, part of Raytheon Technologies Corp., was awarded a $412 million contract in September to upgrade Taiwanese military radar as part of a $1.1 billion package of U.S. arms sales to the island. Boeing Defense received a $355 million contract to supply Harpoon missiles.
Beijing responded to that sale by announcing sanctions against the CEOs of Raytheon and of Boeing Defense but gave no details of what they were.
Lockheed Martin has supplied Taiwan’s military with radar, helicopters and air traffic control equipment. It plays a role in the island’s development of its own fighter jet and navy frigates.
In China, Lockheed Martin has sold air traffic control equipment for civilian airports and helicopters for commercial use.
Beijing announced plans for the “unreliable entity” list in 2019 in response to U.S. restrictions imposed on Huawei Technologies Ltd., a Chinese maker of telecom equipment.
Learn how to navigate and strengthen trust in your business with The Trust Factor, a weekly newsletter examining what leaders need to succeed. Sign up here.
