The List Wars: China Prepares to Retaliate Against the US With Its Own 'Entity List'
China's "unreliables" list is expected to target large American technology companies such as Qualcomm, Cisco and Apple, and could subject them to market restrictions, investigations and civil or criminal punishment.
June 05, 2020 at 07:47 PM
4 minute read
As U.S.-China hostilities increase and the relationship between the two countries continues to deteriorate, U.S. companies in China may soon take a big hit as Beijing prepares to release its long-threatened "unreliable entity list"—a move that would subject named companies to investigations, market restrictions and even civil, administrative and criminal liability.
While China first mentioned the possibility of such a list more than a year ago, The Global Times, which is published by the People's Daily, the official newspaper of China's ruling Communist Party, reported last month that China is now ready to put U.S. companies on an "unreliable entity list."
The Chinese list is largely seen as retaliation for the United States expanding its own "Entity List." Beijing first announced it would establish such a list in May of 2019 in response to Huawei being placed on the U.S. Entity List, which effectively barred U.S. companies from doing business with the Chinese company. The announcement at the time raised considerable alarm among foreign companies in China, worried about survival in the world's second-biggest economy. But more than one year later, the list remains unpublished.
Tensions between the U.S. and China have significantly escalated since then. In April, the U.S. Commerce Department unveiled new rules increasing its scrutiny of technology exports to China. These were followed by greater restrictions on Chinese telecom giant Huawei's global access to chips made with U.S. technology. In late May, the administration blacklisted dozens more Chinese entities through the Entity List on national security grounds.
Then last week, U.S.-China relations fell to a new low when President Donald Trump announced that he will start stripping Hong Kong of its special trade privileges. The move came on the back of new national security legislation that Beijing is imposing on Hong Kong, bypassing the city's own legislature. In response, China has vowed to take "necessary countermeasures" against the U.S., which has been reported by Chinese state media as a reference to the unreliable entity list.
This list war—another sign of the further decoupling of China and the U.S.—will have major implications for U.S. businesses, lawyers say. If China goes ahead with its list, the accompanying measures could include launching investigations and imposing restrictions on such U.S. companies as Apple, Cisco and Qualcomm and suspending purchase of Boeing airplanes, according to the Global Times.
Kenneth Zhou, a Beijing partner at Wilmer Cutler Pickering Hale and Dorr and a member of the board of governors of the American Chamber of Commerce in China, said some of these measures will not only mean restrictions on market access, investment and licensing approvals, but also could include punishments through China's social credit system.
"It's fundamentally technology companies and companies which are really dependent on the Chinese market [that will be targeted by China's unreliable entity list]," said Lester Ross, head of Wilmer's Beijing office and chair of the China policy committee at the American Chamber of Commerce in China.
"China has already embarked upon a substantial effort … to reduce its dependence on foreign technology. So it can accelerate that movement … and exact punishment upon those companies and the country in which they're incorporated."
The Global Times report suggested that China will launch "rounds of endless investigations" on foreign firms in order to dampen investors' confidence and squeeze the firms' income in the Chinese market. According to Chinese officials, any foreign entities that cut off supplies or adopt discriminatory measures against Chinese companies for noncommercial reasons will be added to the list.
Qualcomm used to be a chip supplier to Huawei, while Cisco is considered a major rival to Huawei in the manufacturing of telecom equipment.
For many U.S. companies, the Trump administration's restrictions already limit their ability to do business with Chinese partners, and now China's retaliation promises to restrict them even more. Wilmer's Ross, who has raised concerns with Chinese authorities in his capacity as both a law firm partner and a core member of the American Chamber in China, does not foresee China changing its course.
"Their point is: look into your own country, and you'll understand why it is we're doing what we're doing," he said.
Click here to listen to the full interviews with Wilmer's Lester Ross and Kenneth Zhou in the latest episode of the China Law Podcast.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllWill a Market Dominated by Small- to Mid-Cap Deals Give Rise to This Dark Horse US Firm in China?
Big Law Sidelined as Asian IPOs in New York Dominated by Small Cap Listings
X-odus: Why Germany’s Federal Court of Justice and Others Are Leaving X
Law Firms Mentioned
Trending Stories
- 1We the People?
- 2New York-Based Skadden Team Joins White & Case Group in Mexico City for Citigroup Demerger
- 3No Two Wildfires Alike: Lawyers Take Different Legal Strategies in California
- 4Poop-Themed Dog Toy OK as Parody, but Still Tarnished Jack Daniel’s Brand, Court Says
- 5Meet the New President of NY's Association of Trial Court Jurists
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250