Is China's 'Unreliable List' A Serious Threat to Foreign Companies?

FedEx

The Ministry of Commerce of China, or MOFCOM, announced on May 21 that it will soon be releasing a blacklist of foreign companies that will face—as yet unspecified—sanctions for anti-China activities. This “Unreliable List” of foreign companies has generally been viewed as, at least in part, a response to increasing actions being taken by the U.S. administration against Chinese IT giant, Huawei Technologies Co. Ltd.

Much of the information so far released has been vague, but according to MOFCOM, inclusion of foreign companies on the Unreliable List is based on four factors: First, whether the entity has adopted discriminatory measures against Chinese entities including a blockade or supply cut; second, whether the foreign entity violates market rules for non-commercial purposes; third, whether a foreign entity's actions have caused actual damage to a Chinese company; and finally, whether such actions pose actual or potential threats to China's national security.

The government has not so far clearly identified what restrictions or punishments will be imposed on foreign firms that are included on the Unreliable List, although MOFCOM spokesman Gao Feng has made assurances that any foreign company that complies with Chinese laws, market rules and the spirit of contracts will not have to worry about the list. He also stressed, however, that China will make no compromise on key matters of principle in the trade disputes with the U.S. “China's attitude is very clear. The United States must change its attitude, show sincerity and correct its wrong practices if it wants the talks to continue,” he said.