China publication of 'unreliable entities list' depends on Sino-U.S. trade talks: sources

BEIJING (Reuters) - China’s so-called “unreliable entities list” aimed at punishing firms deemed harmful to Chinese interests is ready, but whether the list will be published depends on how Sino-U.S. trade talks progress, two Chinese government sources said on Friday.

FILE PHOTO: Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song/File Photo

The parameters for what and who to include in the list had already been largely finalised, said one of the two sources, who are familiar with the thinking of Chinese leadership, adding that the list still needed to go through an approval process.

“There is already a basic list of companies, but the list may be adjusted according to how the China-U.S. trade dispute progresses,” the source told Reuters, declining to elaborate on the identities of the firms.

“But Beijing may hold back from publishing the list until the trade situation with the United States is at its most tense,” the source said, declining to be identified due to the sensitivity of the matter.

China’s Ministry of Commerce, which has been working on the list, did not respond to a faxed request for comment.

At end-May, the ministry said it would draw up such a list to target foreign enterprises, groups and individuals who block supplies to Chinese companies for non-commercial reasons and violate market rules.

Entities that seriously damaged the rights and interests of Chinese firms and harmed China’s national security would also be put on the blacklist.

The plan for the list came after the United States imposed additional tariffs on billions of dollars of Chinese goods and added Chinese telecoms giant Huawei Technologies Co Ltd [HWT.UL] to Washington’s own export blacklist.

The U.S. Commerce Department has barred multiple Chinese tech firms from buying parts and components from American companies without approval from the U.S. government, citing potential threats to national security.

On Oct. 7, Washington expanded its trade blacklist to include eight Chinese companies including video surveillance firm Hikvision, as well as leaders in facial recognition technology SenseTime Group Ltd and Megvii Technology Ltd.

U.S. officials said the announcement was not tied to the resumption of trade talks with China in Washington this week.

“If Sino-U.S. trade ties improve, the likelihood of China releasing the unreliable entities list is not huge,” the second source said.

“But if Washington once again exerts pressure on Beijing during their trade talks, China has sufficient and compelling measures to retaliate.”

In late September, the Commerce Ministry said China was still going through internal procedures for rolling out the list.

The ministry previously said the list was not being created to target companies, groups or individuals from specific countries.

Reporting by Ryan Woo and Yawen Chen; Additional reporting by Jing Xu in Beijing; Editing by Nick Macfie