(Bloomberg) -- China has imposed sanctions on 13 US military companies in retaliation for Washington’s planned arms sales to Taiwan, a move seen as largely symbolic but which has the potential to disrupt the firms’ supply chains.
The companies affected are mostly related to drone manufacturing and include BRINC Drones Inc., Shield AI Inc., and Kratos Unmanned Aerial Systems Inc. The Foreign Ministry in Beijing said in an announcement Thursday that the assets of all 13 companies are frozen and no China-based entities can transact or work with them.
The countermeasures were warranted by the US arms sales to Taiwan that “seriously interfere with China’s domestic affairs, and seriously damage China’s sovereignty and territorial integrity,” the ministry said. Six senior US executives will additionally be subject to sanctions, according to the statement.
Taiwan is a self-ruled democracy that remains a key flashpoint in relations between the US and China, which views the island as part of its territory. The US backs Taiwan with arms sales that anger Beijing, and also politically and economically.
Many of the companies targeted by China were part of a delegation that participated in a trade mission to Taiwan in September.
While China’s response is mostly symbolic, since the firms have a minimal presence in the country, its previous sanctions against a US drone maker contributed to a supply chain crisis, the Financial Times reported in October.
Taiwan Tensions
Days before China’s latest announcement, Taiwan’s President Lai Ching-te visited Hawaii on his first stopover on US soil during a state visit to Taiwan’s Pacific island allies. Beijing later condemned the US for allowing him to transit and could respond to Lai’s stops in Hawaii and Guam with more military drills around Taiwan.
The People’s Liberation Army has already held two such sets of exercises since Lai took office in May.
Shield AI, one of the US firms targeted by China, is developing autonomous technology for aircraft to enable drones to execute a mission without GPS, communications, or remote pilots.
Speaking in September during a House Armed Services panel hearing, the company’s co-founder, Brandon Tseng, mentioned China among adversaries able to deploy technology to eclipse traditional weapons systems.
“AI pilots that enable edge autonomy are critically important because Russia, China, and Iran are jamming GPS and communication links to stop our legacy drones and weapons that rely on GPS or communications, and have proliferated surface to air missile systems to stop our manned fighter jets,” Shield AI’s Tseng said in his prepared testimony.
--With assistance from Mark Bergen, Yian Lee and James Mayger.
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