US blacklists 5 Chinese supercomputing companies, labels them national security threats

The U.S. Department of Commerce added five Chinese technology companies to its national security entity list on Friday ahead of President Trump and Chinese President Xi Jinping's expected meeting at the G-20 Summit next week.

The companies' addition to the entity list requires them to seek U.S. government approval before they can purchase American parts and undergo a license review, effectively blacklisting them.

The newly listed Chinese companies are Chengdu Haiguang Integrated Circuit, Chengdu Haiguang Microelectronics Technology, Higon, Sugon and the Wuxi Jiangnan Institute of Computing Technology, according to a filing from the department's Bureau of Industry and Security. The restriction also listed numerous aliases related to the companies.

The five groups are involved in supercomputing and were added to the list over concerns of military applications of their technology.

"The Entity List [...] identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States," according to the filing.

The additions to the blacklist came ahead of Trump and Xi's anticipated meeting to discuss trade on the sidelines of the G-20 Summit in Osaka, Japan. The hope is the leaders' talk will rekindle negotiations amid an ongoing trade war between the two countries.

"The heads of the two trade teams will communicate, according to instructions passed down from the two presidents," Chinese commerce ministry spokesman Gao Feng told reporters, according to Reuters. "We hope [the United States] will create the necessary conditions and atmosphere for solving problems through dialogue as equals."

Trump has imposed 25 percent tariffs on $250 billion in Chinese imports and is preparing to target another $300 billion, extending the import taxes to virtually everything China ships to the United States. China has retaliated with tariffs on U.S. products.

"Adding more Chinese companies to the U.S. bad guys list may be seen as a way to ramp up the pressure on China," said Amanda DeBusk, a partner at Dechert LLP and the former Commerce Department assistant secretary for export enforcement. "However, the Chinese may see this as ill-timed bullying. They cannot be seen as making concessions to the United States, so this may have the effect of hurting any chances for trade agreement."


Vice President Mike Pence also canceled a planned speech in Washington, D.C., that would have criticized China's stance on human rights.

The remarks, meant to be delivered at the Wilson Center, were already delayed from its original date of June 4 — the 30th anniversary of the Tiananmen Square massacre.

A White House official cited the apparent progress of trade talks between Trump and Xi for the postponement and said his speech will be delivered after the G-20 meeting, according to Bloomberg.