Beijing says firms on ‘unreliable entities list’ will be banned from trading with, investing in China

BEIJING, Sep 19, 2020, SCMP. More than 15 months after its announcement, China has finally released details of how its new “unreliable entities list” will work, South China Morning Post reported.

Beijing said in May 2019 it would blacklist foreign firms or individuals that violated market rules or contractual obligations, or took measures that hurt the rights of Chinese businesses or threatened China’s national security interests.

According to a statement issued by the ministry on Saturday, foreign firms and individuals on the blacklist would be restricted or banned entirely from trading – both imports and exports – with China and also from investing in the country.

Authorities would also “take corresponding actions” against foreign companies, organisations and individuals if their businesses or related actions “harm China’s sovereignty, security and development interests, violate market rules, halt contractual obligations with Chinese companies or individuals, or take discriminatory measures on Chinese companies or individuals to severely hurt their legitimate interest”, it said.

An office would be established to investigate and rule on cases of entities or individuals being suspected of breaking the new rules, the statement said.

Any organisation or person that was investigated would be given the opportunity to defend themselves and also be granted a grace period to correct any unacceptable behaviour, it said.

In the event of a rule breach by an individual being confirmed, that person would be stripped of their work and residence permits, and could be denied access to the country. In some cases, fines would also be payable, the statement said, without elaborating.

The publication of the rules comes amid a tense stand-off between Beijing and Washington. The commerce ministry’s statement said China opposed unilateralism and protectionism, firmly defended its national interests and supported a multilateral trade system.

Beijing’s announcement last year triggered concerns among foreign businesses as to how the new list would be implemented.

The South China Morning Post reported earlier that authorities finalised the details of the list late last year but were reluctant to unveil them due to concerns of a possible backlash that could make the country a less attractive place to do business.

There has been speculation that US courier firm might be the first company to be blacklisted by Beijing after an investigation was started last year into allegations it allowed weapons to be shipped to China and diverted packages intended for Huawei to the US.

Liao Shiping, a law professor at Beijing Normal University, said the list only targeted illegal activities by individual foreign entities and “does not mean a change of China’s position to welcome and protect foreign investment”.

“The rules do not target any specific country or any specific entities,” he was quoted as saying in a separate statement by the commerce ministry.

The procedure and decision making under the new rules would be transparent and open, he said.
Earlier this month, China’s vice-premier Hu Chunhua and vice-minister for commerce Wang Shouwen met foreign business delegates and said the country would continue to remove barriers to market access.