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China Hints U.S. Blacklist Imminent in Threat to Trade Talks

Jeffrey Black and Daniel Flatley

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Chinese state media said the government would soon publish a list of “unreliable entities” that could lead to sanctions against U.S. companies, signaling trade talks between the two nations are increasingly under threat from disputes over human rights in Hong Kong and Xinjiang.

The Communist Party-backed Global Times said in a tweet early Tuesday that the list was being sped up in response to a bill sponsored by Republican Senator Marco Rubio requiring sanctions against Chinese officials involved in alleged abuses of Uighur Muslims in the far west region of Xinjiang. Beijing has threatened to publish such a list of companies since May, after the U.S. placed restrictions on Huawei Technologies Co.

December 2, 2019

China’s foreign ministry later sidestepped a question about the report, saying only that the country’s determination to oppose foreign interference was unwavering. “China will take further necessary measures according to the development of the situation,” ministry spokeswoman Hua Chunying told a regular news briefing.

Any response from China on the Xinjiang issue that hits U.S. companies would add another obstacle as the world’s two biggest economies struggle to finalize a phase-one deal to de-escalate their trade war. Investors are looking for any signs of progress ahead of a Dec. 15 deadline for President Donald Trump to add yet more tariffs on Chinese imports.

Stocks were mixed in Asia as investors contemplated the latest developments in China, as well as Trump’s move to threaten new levies on France and slap steel tariffs on both Brazil and Argentina.

Hong Kong Bill

On Monday, Trump said that trade talks with China had been complicated by legislation he signed last week threatening sanctions on officials who undermine Hong Kong’s semi-autonomy from Beijing. That legislation, along with a bill that bans the export of crowd control devices to Hong Kong police seeking to stem pro-democracy protests, led China to threaten sanctions on some human rights organizations and halt U.S. naval visits to the city.

Trump Signals Hong Kong Law Complicates China Trade Talks

Global Times Editor-in-Chief Hu Xijin said Tuesday that the Xinjiang bill would spur more retaliation from China, writing on Twitter that U.S. officials may face visa restrictions and U.S. diplomatic passport holders could be banned from entering the province. China stands accused of incarcerating as many as a million Uighurs as part of an anti-terrorism campaign, actions it describes as voluntary re-education.

China hasn’t specified which companies would be affected by the blacklist, though courier firm FedEx Corp. has been under particular scrutiny this year. Any move from President Xi Jinping’s government must also weigh the costs on China’s economy, which is growing at its slowest pace in decades.

The U.S. House of Representatives is expected to vote Tuesday on the Xinjiang bill, which amends a version passed by unanimous consent in the Senate in September. It adds provisions that require the president to sanction Chinese government officials responsible for the repression of Uighurs, a predominantly Muslim and Turkic-speaking ethnic group, and places restrictions on the export of devices that could be used to spy on, or restrict, the communications or movements of group members.

Year-End Goal

Lawmakers are working to resolve differences between the House and Senate versions of the bills to find a version that can pass swiftly through Congress before the end of the year. Rubio said that means any changes would need to be “pre-cleared” by the relevant committees so the bill could be passed by unanimous consent in the Senate.

Among other provisions, the bill requires the president to submit to Congress within 120 days a list of senior Chinese government officials who have committed human rights abuses against Uighurs in Xinjiang or elsewhere in China. That list would include Xinjiang Party Secretary Chen Quanguo and officials responsible for mass incarceration or reeducation efforts targeting Uighurs and other predominantly Muslim ethnic minorities.

The president would be required to impose visa and financial restrictions under the Global Magnitsky Act on the listed individuals. The State Department would also need to submit a report to Congress on human rights violations in the region.

(Updates with foreign ministry response in third paragraph)

--With assistance from Dandan Li and Daniel Ten Kate.

To contact the reporters on this story: Jeffrey Black in Hong Kong at jblack25@bloomberg.net;Daniel Flatley in Washington at dflatley1@bloomberg.net

To contact the editors responsible for this story: Daniel Ten Kate at dtenkate@bloomberg.net, ;Malcolm Scott at mscott23@bloomberg.net, Jon Herskovitz

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