China yesterday launched a mechanism that would allow it to sanction foreign companies, upping the ante in a tech dispute with the US a day after Washington moved to curb popular Chinese apps TikTok and WeChat.
China’s long-expected “unreliable entities list” is seen as a weapon for Beijing to retaliate against the US, which has used its own “entity list” to shut Chinese telecom giant Huawei out of the US market, while also moving against TikTok and WeChat.
Its implementation comes just a day after the US Department of Commerce stepped up the pressure by ordering a ban on downloads of video app TikTok and effectively blocking the use of WeChat, the Chinese “super app.”
The Chinese Ministry of Commerce announcement did not mention any specific foreign entities that could be targeted.
It said the new system would consider sanctions on entities whose activities “harm China’s national sovereignty, security and development interests” or breach “internationally accepted economic and trade rules.”
That language closely tracks wording that Beijing has used to repeatedly denounce US actions against Chinese companies.
Punitive measures might include fines against the foreign entity, banning it from conducting trade and investment in China, and restrictions on the entry of personnel or equipment into the country.
It covers “foreign enterprises, other organizations and individuals,” the ministry said.
Under the US order against the Chinese apps, WeChat, owned by Tencent Holdings Ltd (騰訊), would lose functionality in the US from today.
TikTok users would be banned from installing updates, but could continue to access the service through Nov. 12.
That timeframe potentially allows for a tie-up between TikTok, owned by China’s ByteDance Ltd (字節跳動), and a US company to safeguard data for the wildly popular app to allay Washington’s security concerns.
With US President Donald Trump facing a tough re-election campaign, US officials have described the measures as essential to safeguard national security from potential Chinese espionage through the platforms.
In a response to the US steps, the ministry condemned what it called US “bullying,” saying it breached international trade norms and that there was no evidence of any security threat.
“If the US insists on going its own way, China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” it said, without specifying the potential measures.
TikTok vowed to fight the Trump crackdown in court, saying it impedes a tool “for entertainment, self-expression and connection.”
Critics said that although the security risks were unclear, the sweeping ban raises concerns about the US government’s ability to regulate free expression.
“It’s a mistake to think of this as [only] a sanction on TikTok and WeChat. It’s a serious restriction on the First Amendment rights of US citizens and residents,” said Jameel Jaffer, director of the Knight First Amendment Institute at Columbia University.
“For ByteDance, their back is against the wall to accept the terms of the deals outlined over the past few days,” Daniel Ives at Wedbush Securities said in a research note.
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