China said Saturday it had officially implemented a mechanism enabling it to restrict foreign entities, a much-anticipated move seen as a reprisal against US penalties imposed on Chinese companies such as telecom giant Huawei.
An announcement by the Ministry of Commerce – a day after the US ordered a ban on TikTok downloads – did not mention any specific foreign entities, but broadly spelled out the factors that could trigger punitive measures, which may include fines, restriction of business activities and investment in China, and the entry of personnel or equipment into the country.
The launch of China’s “unreliable entities list” ups the ante in the escalating commercial fight with the Trump administration, which has used its own “entity list” to bar Huawei from the US market on national security grounds.
China would consider sanctions on entities whose activities “harm China’s national sovereignty, security, and development interests” or violate “internationally accepted economic and trade rules”.
That language closely tracks wording that Beijing has used to repeatedly denounce US actions against Chinese companies.
The US on Friday ordered a ban on downloads of popular video app TikTok and effectively blocked the use of the Chinese super-app WeChat on similar grounds.
Under the order, the Tencent-owned WeChat app would lose functionality in the United States from Sunday. TikTok users will be banned from installing updates but could keep accessing the service through November 12.
That timeframe potentially allows for a tie-up between TikTok, owned by China’s ByteDance, and a US company to safeguard data for the wildly popular app to allay Washington’s security concerns.
US officials described Friday’s measures as essential to national security as President Donald Trump confronts Beijing amid a tough re-election campaign.
“The Chinese Communist Party has demonstrated the means and motives to use these apps to threaten the national security, foreign policy, and the economy of the US,” Commerce Secretary Wilbur Ross said in a statement.
Trump has claimed that Chinese tech could be used for spying.
China’s Commerce Ministry on Saturday condemned what it called US “bullying” that violates international trade norms without providing any evidence of a security threat.
“If the US insists on going its own way, China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” it said, without specifying the potential measures.
TikTok denounced the order and said it would continue to fight the Trump administration’s crackdown in court, saying it impedes a tool “for entertainment, self-expression and connection.”
Critics said that while the security risks were unclear, the sweeping ban raises concerns about the government’s ability to regulate free expression.
“It’s a mistake to think of this as (only) a sanction on TikTok and WeChat. It’s a serious restriction on the First Amendment rights of US citizens and residents,” said Jameel Jaffer, director of the Knight First Amendment Institute at Columbia University.
Service will be ‘degraded’
The moves would effectively disable US use of WeChat – a so-called super-app used for messaging, shopping, payments and other services – and TikTok from the online marketplaces operated by Apple and Google.
After Sunday, services on WeChat will be “degraded” because of restrictions on US digital services that support the app, said a senior Commerce Department official.
The official said existing users may retain some capability, but that it “may not be particularly functional after Sunday.”
WeChat is widely used among Chinese expats to keep in touch with people back home. A court challenge to the ban by US-based WeChat users is pending.
The US ban on WeChat does not affect its service in China and the rest of the world where the app is much more widely used.
Existing TikTok users will be able to continue using the app until November 12 – when it would also face a full ban on its US operations if no deal is reached, according to officials.
TikTok’s brand of brief, quirky phone videos has become hugely popular, especially among young people, with 100 million users in the US alone. Its use has further soared during the coronavirus pandemic.
The ban ramps up the battle with Beijing over technology, which some analysts say is based more on competitive than security concerns.
“The Trump administration has provided no evidence that a ban on WeChat and TikTok is necessary to address a national security threat,” said Daniel Castro of the Information Technology and Innovation Foundation
“Instead, the actions announced today put consumers at risk by cutting them off from software updates, including necessary security updates.”
Pressure grows for a deal
The move ramps up pressure on ByteDance to conclude a deal to sell all or part of TikTok to allay US security concerns.
A potential deal would allow Silicon Valley giant Oracle to become the tech partner for TikTok, but some US lawmakers have objected to allowing ByteDance to keep a stake.
Trump said Friday a deal could happen quickly.
“For ByteDance, their back is against the wall to accept the terms of the deals outlined over the past few days,” Daniel Ives at Wedbush Securities said in a research note.
“We still believe a deal can be reached and this shutdown averted although it’s a critical 48 hours ahead for deal negotiations between all parties involved.”
The United States and China are engaged in an escalating trade battle centring on technology.
Huawei, the world’s leading supplier of telecoms networking equipment, has been a particular target.
Washington has used its own entity list to essentially ban Huawei from the US market and prevent American companies from doing any business with it or with Huawei-affiliated organisations.
The United States says Huawei could be used by Chinese state security to infiltrate communications networks.
China’s government and Huawei deny that, saying the US has offered no evidence supporting the claim.
China has for years blocked or restricted big US tech companies from operating in its market, including Facebook, Twitter, and Google.