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On Wednesday, China announced sanctions on 12 firms due to their ties with the U.S. defense sector, along with 10 top executives of these companies. This move was a retaliatory measure against U.S. arms sales to Taiwan and U.S. sanctions on Chinese firms conducting business with Russia.
The sanctioned entities include divisions of Lockheed Martin (NYSE:LMT), RTX (NYSE:RTX), and General Dynamics (NYSE:GD). High-ranking officials from Northrop Grumman (NYSE:NOC) and General Dynamics (GD) were also targeted.
It’s not uncommon for China to impose sanctions on U.S. defense corporations amidst rising geopolitical strains between the two nations. Last year, the importation of goods and new investments in China were prohibited for Lockheed Martin (LMT) and RTX’s (RTX) Raytheon Missiles and Defense unit.
The recent sanctions follow the U.S. “illegally and indiscriminately imposing unilateral sanctions on several Chinese companies on the pretext of so-called Russian-related issues” and its “continued arms sales to Taiwan”, as per China’s Foreign Affairs Ministry.
Following the inauguration of Lai Ching-te as the new president of Taiwan this week, Boeing Defense, Space and Security (NYSE:BA) and two other U.S. defense firms received sanctions from China due to their arms sales to Taiwan. Mike Gallagher, a former Republican congressman from Wisconsin, known for his support for Taiwan, was also sanctioned by China.
China views Taiwan as a separatist region. Although the United States does not officially recognize Taiwan as a sovereign state, it is mandated by federal law to aid Taiwan in its defense.
