China introduces a mechanism to restrict foreign tech entities

SHANGHAI: The Republic of China has decided to curb the United States’ entities under a newly launched mechanism to restrict foreign entities’ operations.

A tit-for-tat move came after the imposition of sanctions on Huawei by the US and banning TikTok amid increasing tensions between both the countries.

China’s Ministry of Commerce, however, did not mention any specific foreign entity. It, however, spelt out the factors that could activate punitive measures including fines, restrictions on import-export business or investment in China, and the entry of personnel or equipment associated with the foreign entities into the country.

According to the AFP, which quoted the ministry’s statement, the new mechanism would cover foreign enterprises, other organizations and individuals.

It is believed that the launch of the mechanism which issued a list of ‘unreliable entities’ with no specific mention of any entity would further escalate the commercial-fight with the President Trump administration.

The Trump administration has used its own “entity list” to ban Huawei from the US market on the grounds of national security.

The announcement from China regarding launching of new mechanism made a day after the US ordered for effectively banning of popular video app TikTok and blocking of Chinese super-app WeChat on the similar grounds of national security.

According to the AFP, the banning on TikTok and WeChat as well as barring Huawei also prompted a threat by China to strike back.

AFP reported that Beijing would consider imposing sanctions on those entities whose activities were harming China’s sovereignty, security and interests relating to the country’s development.

Beijing would also consider imposing sanctions on those entities whose activities were violating internationally accepted economic and trade rules.

The ministry said that an investigation would be launched under China’s cabinet, the State Council if an entity was suspected of violating the provisions. However, the management of the entity would be granted an opportunity to defend its conduct before the Chinese investigators.

On the other hand, like the US system, the Chinese companies that are relying on business with the targeted organizations would be allowed to apply for exemptions from any ban on doing business with them.

The US and China have been engaged in a mounting trade-battle revolving around the technology.

The US has expressed its reservations claiming that Chinese entity Huawei could be used by China’s intelligence to subvert communications networks. But, China and the company deny that, saying that the US had furnished no evidence in support of its claim.

For years, China has blocked or limited the US’s giant tech companies including Facebook, Twitter and Google.

Reuters reported that TikTok has around 100 million users in the US while WeChat has had an average of 19 million daily active users in the United States.

The Commerce Department of the US said that it would not compel the individual users to uninstall the apps or stop using them. But the administration aims at barring the apps for top corporate levels. But with time, the lack of updates will decrease the usability of apps.

Commerce Department is also excluding additional technical transactions with WeChat that will considerably decrease the usability of the app in the US.

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