China Adds Lockheed, Raytheon to Unreliable Entity List

China’s commerce ministry this week announced penalties and trade restrictions on U.S. defense companies Lockheed Martin and Raytheon over their arms sales to Taiwan. The measure placed Lockheed and Raytheon Missiles and Defense, a Raytheon subsidiary, on China’s so-called Unreliable Entity List and prohibits them from “engaging in import and export activities related to China,” according to an unofficial translation of a Feb. 16 ministry notice.

China will also impose fines against each company of up to “twice the amount of each enterprise's arms sales contract to Taiwan” that occurred since the implementation of China’s Unreliable Entity list regulations in 2020 (see 2009210017). Lockheed and Raytheon must pay those fines within 15 days or face “additional fines and other measures in accordance with the law,” the ministry said.

It’s unclear how China will enforce the fines. Neither firm sells defense products to China, according to Reuters, but Raytheon sells its Pratt & Whitney aircraft engines and other items to China's commercial aviation industry.

China previously imposed penalties on the companies for arms sales in Taiwan, including sanctions last year against both firms’ CEOs (see 2209160058). A Lockheed spokesperson said it works “closely with the U.S. government on any military sales to international customers” and “closely adheres to United States government policy with regard to conducting business with foreign governments.” A spokesperson for Raytheon didn’t comment.

White House Press Secretary Karine Jean-Pierre told reporters Feb. 16 that the Chinese measures are “symbolic” and “unnecessary.”