China and “unreliable entities”
China is threatening to put some western companies on an “unreliable entities” list.
The government made the threat on September 19. Companies that land on the list risk being denied access to the Chinese market or barred from making investments in China. They could also have to pay fines or find their executives denied entry into China.
The action puts companies on notice that China may penalize them for bowing to pressure from western governments to take a harder line against China.
Sun Hong, a partner in the Norton Rose Fulbright Shanghai office, said the list will be maintained by a new “office of working mechanism” in the Ministry of Commerce.
The government said it will label companies as unreliable entities if they “endanger the sovereignty, safety and development interests of China” or “discontinue normal transactions with Chinese enterprises, other organizations or individuals in breach of normal market trading principles” or “discriminate against such persons and severely damage their legitimate interests.”
The ministry will notify any companies it intends to add to the list. The companies will then have a period of time to fix their behavior before penalties are imposed.