The administration of US President Donald Trump is close to declaring that 89 Chinese aerospace and other companies have military ties, restricting them from buying a range of US goods and technology, a draft copy of the list seen by Reuters showed.
The list, if published, could further escalate trade tensions with Beijing and hurt US companies that sell civil aviation parts and components to China, among other industries.
A spokesman for the US Department of Commerce, which produced the list, declined to comment. The Chinese Ministry of Foreign Affairs did not immediately respond to a request for comment.
Commercial Aircraft Corp of China (COMAC), which is spearheading Chinese efforts to compete with Boeing and Airbus, is on the list, as is the Aviation Industry Corp of China (AVIC) and 10 of its related entities.
The list is included in a draft rule that identifies Chinese and Russian companies the US considers “military end users,” a designation that means US suppliers must seek licenses to sell a broad swath of commercially available items to them.
According to the rule, applications for such licenses are more likely to be denied than granted.
Trump has in the past few months stepped up his actions against China.
On Nov. 12, he unveiled an executive order prohibiting US investments in Chinese companies that Washington says are owned or controlled by the Chinese military.
The pending list comes after the department expanded the definition of “military end user” in April.
The April rule includes not only armed service and national police, but any person or entity that supports or contributes to the maintenance or production of military items — even if their business is primarily non-military.
The export restriction applies to items as disparate as computer software such as word processing programs, scientific equipment such as digital oscilloscopes, and aircraft parts and components.
In terms of aircraft, the items include everything from brackets for flight control boxes to the engines themselves.
News of the list comes at a sensitive time for the US aerospace industry as Boeing seeks Chinese approval of its 737 MAX after it was cleared by US regulators last week.
In March last year, China was the first nation to ground the jet following two fatal crashes, and it is already expected to wait months to lift the ban.
A spokesman for Boeing declined to comment.
Washington trade lawyer Kevin Wolf, a former department official, said that the department had shared the draft rule with a technical advisory committee of industry representatives, and it should have been kept confidential.
The rule and list still could be modified, Wolf said, adding that the clock was running out for it to go into effect under the Trump administration as it would need to be cleared and sent to the US Federal Register, the official US publication for rules, by the middle of next month.
In the draft rule seen by Reuters, the department said that being able to control the flow of US technology to the listed companies was “vital for protecting US national security interests.”
However, a former US official who did not want to be identified, said “merely creating a list and populating it is a provocative act.”
An aerospace industry source said it could spur China to retaliate.
The inclusion of COMAC would come as a surprise to at least one major US supplier, which had determined the firm was not a military end user, the industry source said.
A list also would provide European competitors with an opening to promote their manufacturers, by pointing out they do not have to clear such hurdles, even if the US grants the licenses, the industry source said.
General Electric and Honeywell International supply COMAC and have joint ventures with AVIC.
Besides the 89 Chinese listings, the draft rule also designates 28 Russian entities, including Irkut, which is also aiming to break into Boeing’s market with its MC-21 jetliner development.
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