China counterattacks in trade war by starting an ‘Unreliable Entity List’

Xi’s making a list, checking it twice, gonna find out who’s naughty or nice. Retaliation’s coming to town.

The Chinese Ministry of Commerce has announced the creation of an ‘Unreliable Entity List’, which will consist of foreign companies it thinks are a threat to national security, or whatever. While no companies have yet been announced as being on the Chinese shit-list, it’s hard to view this as anything other than straight retaliation for the US entity list, which has done so much to damage Huawei and other Chinese organisations. The only surprising thing about this move is that it took so long.

Of course the policy announcement couldn’t just say ‘two can play at the entity list game’, so we get a wordy, legalese document consisting of 14 articles, most of which seem designed to sugar the pill for the international community. The first article asserts the right of China to protect its interests and the second announces the intention to act against any entity that is suspected of acting against those interests, in any number of vaguely-defined ways.

Article three insists China is a model global citizen, while articles four-to-nine detail the bureaucratic process through which a company can find itself on the list. The last five articles cover the potential consequences of being put on the list and what, if anything, can be done to get off it.

This is why protectionism is bad. When one side unilaterally takes action against the other, they force them to retaliate. China can bang on all it wants about how it just wants to live in harmony with the rest of the world, but its past actions don’t support that claim and even if it could claim any moral high ground, this move forgoes it.

Just a month ago China had a moan about the US not playing by the global trade rules, but now it’s going to unilaterally act against any foreign companies it doesn’t like the look of. You can’t have it both ways, China, regardless of how much token due process you claim to be implementing. Furthermore, state control of domestic companies violates a basic rule of global trade, yet that’s exactly what President Xi Jinping has just announced his intention to do.