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New sanctions on Iranian and Chinese firms as Trump exits

The United States on Tuesday blacklisted a Chinese company that makes elements for steel production, 12 Iranian steel and metals makers and three foreign-based sales agents of an Iranian metals and mining holding company, seeking to deprive Iran of revenues as U.S. President Donald Trump’s term winds down.

The U.S. Treasury Department, in a statement, named the China-based company as Kaifeng Pingmei New Carbon Materials Technology Co Ltd. (KFCC), saying it specialized in the manufacture of carbon materials and provided thousands of metric tonnes of materials to Iranian steel companies between December 2019 and June 2020.

No one at KFCC, which makes graphite electrodes, was available for comment on Wednesday. Filings show the company is owned by Henan Yicheng New Energy, which said it was unaware of the situation.

Shares in Yicheng, which is ultimately controlled by China’s Henan province, fell as much as 6.7% to a two-week low on Wednesday. When Yicheng was buying KFCC in 2019, it said exports – to Southeast Asia, the Middle East and Europe – accounted for about half of KFCC’s core business.

Among the 12 Iranian companies blacklisted are the Pasargad Steel Complex and the Gilan Steel Complex Co, both of which were designated under Executive Order 13871 for operating in the Iranian steel sector.

The others are: Iran-based Middle East Mines and Mineral Industries Development Holding Co (MIDHCO), Khazar Steel Co, Vian Steel Complex, South Rouhina Steel Complex, Yazd Industrial Constructional Steel Rolling Mill, West Alborz Steel Complex, Esfarayen Industrial Complex, Bonab Steel Industry Complex, Sirjan Iranian Steel and Zarand Iranian Steel Co.

The Treasury said it was also designating MIDHCO’s Germany-based subsidiary GMI Projects Hamburg GmbH, its China-based World Mining Industry Co Ltd and U.K.-based GMI Projects Ltd for being owned or controlled by MIDHCO.

“The Trump Administration remains committed to denying revenue flowing to the Iranian regime as it continues to sponsor terrorist groups, support oppressive regimes, and seek weapons of mass destruction,” Treasury Secretary Steven Mnuchin said in the statement.

Trump’s term ends on Jan. 20, when Democrat President-elect Joe Biden is to be sworn in to succeed him.

In related developments U.S. President Donald Trump on Tuesday signed an executive order banning transactions with eight Chinese software applications, including Ant Group’s Alipay mobile payment app, the White House said, escalating tensions with Beijing two weeks before President-elect Joe Biden takes office.

The move, first reported by Reuters, is aimed at curbing the threat to Americans posed by Chinese software applications, which have large user bases and access to sensitive data, a senior administration official told Reuters.

The order argues that the United States must take “aggressive action” against developers of Chinese software applications to protect national security.

It tasks the Commerce Department with defining which transactions will be banned under the directive within 45 days and targets Tencent Holdings Ltd’s QQ Wallet and WeChat Pay as well.

The order also names CamScanner, SHAREit, Tencent QQ, VMate which is published by Alibaba Group subsidiary UCWeb, and Beijing Kingsoft Office Software’s WPS Office.

Kingsoft said in a statement published by Chinese state media that it did not expect Trump’s order to substantially impact the company’s business in the short term. Ant and the Biden transition team declined to comment.

Alibaba, Tencent, CamScanner, SHAREit and the Chinese Embassy in Washington did not immediately respond to requests for comment.

“By accessing personal electronic devices such as smartphones, tablets, and computers, Chinese connected software applications can access and capture vast swaths of information from users, including sensitive personally identifiable information and private information,” the executive order states.

Such data collection “would permit China to track the locations of federal employees and contractors, and build dossiers of personal information,” the document adds.

The order aims to cement Trump’s tough-on-China legacy before the Jan. 20 inauguration of Biden, a Democrat, who has said little about how he plans to address specific tech threats from China.

Biden could, however, revoke the order on the first day of his presidency, though his transition team did not immediately respond to a request for comment on the matter.

The order will likely ratchet up tensions further between Washington and Beijing, which have been locked in a bitter dispute over the origins of the coronavirus and a Chinese crackdown on Hong Kong.

Despite the 45-day time line laid out by the order, the Commerce Department plans to act before Jan. 20 to identify prohibited transactions, another U.S. official told Reuters.

The directive mirrors Trump executive orders signed in August directing Commerce to block some U.S. transactions with WeChat and the Chinese-owned video app TikTok.

Had those orders gone into effect, they would have effectively banned the Chinese apps’ use in the United States and barred Apple Inc and Alphabet Inc’s app stores from offering them for download for new users.

The restrictions, however, were blocked by courts mainly on freedom of speech grounds. The White House is confident the new restrictions will stand up to judicial scrutiny, since applications like Alipay would struggle to bring a First Amendment case, the senior administration official told Reuters.

U.S. Secretary of Commerce Wilbur Ross said in a statement that he supports Trump’s “commitment to protecting the privacy and security of Americans from threats posed by the Chinese Communist Party.”

Reuters reported in November that the U.S. State Department had submitted a proposal to add Ant Group to a trade blacklist in order to deter U.S. investors from taking part in its lucrative initial public offering. But the Commerce Department, which oversees the blacklist, shelved the proposal after Alibaba Group Holding Inc President Michael Evans urged Ross to reject the bid.

Ant is China’s dominant mobile payments company, offering loans, payments, insurance and asset management services via mobile apps. It is 33% owned by Alibaba and controlled by Alibaba founder Jack Ma, but is currently unavailable for American users.

Alipay was downloaded from Apple’s U.S. app store and Google Play 207,000 times in 2020, while image scanning app CamScanner and office suite app WPS Office were downloaded 4.4 million and 563,000 times respectively, according to research firm SensorTower.

Tuesday’s move is the latest in a raft of tough new curbs on Chinese companies.

The White House unveiled an executive order in November banning U.S. investment in alleged Chinese military companies including China’s top chipmaker SMIC and oil giant CNOOC. Last month, the Commerce Department added dozens of Chinese companies, including Chinese drone manufacturer SZ DJI Technology Co Ltd, to a trade blacklist.

Source: Reuters

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