China’s Retaliatory Export Restrictions on U.S. Firms

China has imposed export restrictions on ten U.S. companies, including two involved in rare earth mining, as a response to the Pentagon adding Chinese tech giants to its military-linked firms watch list. The restrictions were announced by China’s Commerce Ministry.

The limitations prohibit the export of dual-use items to these American firms and extend to goods of Chinese origin held by entities and individuals in other countries. The ministry emphasized that ongoing relevant export activities must be stopped immediately.

A spokesperson from the ministry stated that the action was taken to counter what they describe as the U.S. government’s harmful practices. The spokesperson emphasized that the move is to protect China’s national security and comply with nonproliferation and international obligations.

Newsweek has sought comments from the Pentagon outside regular working hours.

Impact of China’s New Restrictions

The restrictions may mainly serve as a symbolic gesture, considering the close ties these companies hold with the U.S. Defense Department and their minimal presence in China.

The sanctions list includes several U.S. defense industry drone or drone hardware providers:

• AVEOX
• Red Cat
• Teal Drones
• IMSAR
• Jaia Robotics
• BAE Systems’ Space & Mission Systems
• Oshkosh Defense
• L3Harris Maritime

It also includes rare earth companies such as:

• MP Materials
• USA Rare Earth

MP Materials runs the Mountain Pass facility in California, which is the sole rare earth mining and processing site in the U.S. USA Rare Earth is developing a complete domestic magnet supply chain spanning Colorado, Texas, and Oklahoma.

Pentagon’s Expanded Tech Giants Watch List

Earlier this month, the Pentagon’s 1260H list of Chinese tech companies tied to military modernization was updated. The list now includes electric-car manufacturers like BYD and NIO, search engine Baidu, and e-commerce giant Alibaba—firms engaged in the development of AI models.

The list, which names 188 Chinese entities, does not immediately prompt sanctions but alerts U.S. businesses of potential risks related to future screening or investment constraints.

Additionally, China’s Finance Ministry announced on Monday that government procurement buyers are banned from purchasing products from 46 U.S. companies. However, according to Xinhua state news agency, this rule does not apply to U.S.-funded enterprises within China.

The state-operated tabloid Global Times noted several U.S. defense firms already subject to previous sanctions—Lockheed Martin, Raytheon Missile & Defense, Boeing Defense, and Space & Security—are featured in the list provided to Chinese companies.