China sanctions Lockheed and Raytheon after vowing retaliation against US restrictions

HONG KONG (CNN) China has slapped sanctions on two American arms manufacturers over arms sales to Taiwan, a day after Beijing pledged to take “countermeasures” in response to Washington’s handling of a suspected Chinese surveillance balloon that entered and escaped from American airspace was shot down by US forces earlier this month.

Lockheed Martin Corporation (LMT) and Raytheon Missiles & Defense, a subsidiary of Raytheon Technologies Corp (RTN), will be added to China’s sanctions list, the Commerce Ministry said in a statement Thursday. They are forbidden to import, export and invest in China.

Lockheed makes the F-22 Raptor, the model responsible for shooting down the Chinese balloon off the coast of South Carolina on February 4th. Raytheon manufactures the AIM-9X Sidewinder missile used on the mission.

China has insisted the sanctions were not related to the “unmanned airship incident”. The Commerce Ministry released a statement Friday morning, saying the measures are part of “normal law enforcement actions” for arms sales by the two entities to Taiwan, which “seriously undermine” China’s national security and territorial integrity.

The sanctions came just days after the US Commerce Department blocked six Chinese companies it said were linked to the Chinese army’s aerospace program from receiving US technology without government approval.

Both Lockheed Martin and Raytheon Missiles & Defense are also subject to fines “double” their arms sales to Taiwan since September 2020, and their officers will be banned from entering and working in China.

It was not immediately clear how Beijing would enforce the fines. While the United States bans arms sales to China, some US defense contractors have ties to the civilian sector.

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“We do business with more than 70 nations around the world, and all of our international sales are strictly regulated by the US government,” a Lockheed Martin spokesman told CNN in a statement.

Raytheon Missiles & Defense did not immediately respond to a CNN request for comment.

Beijing previously imposed sanctions on both companies over their arms sales to Taiwan, without specifying what the penalties would entail and how they would be enforced. China’s ruling Communist Party considers democratic Taiwan to be its territory, although it has never controlled it.

In its statement on Friday, China’s Commerce Ministry confirmed that this was the first time it had used its “unreliable companies list” to impose sanctions on two companies selling arms to Taiwan.

Political tensions between the United States and China have risen over the balloon that Beijing claims is a civilian research aircraft that was blown off course.

Washington has since accused China of overseeing an international air surveillance program. Beijing has denied those claims and, in turn, this week accused the United States of having “illegally” flown high-altitude balloons into its airspace more than 10 times since early 2022, including over the western regions of Xinjiang and Tibet.

U.S. intelligence officials are studying the possibility that the suspected spy balloon was not intentionally maneuvered over the continental U.S. by the Chinese government but was instead deflected off course, CNN reported on Wednesday.

The incident has already sent relations into a downward spiral and resulted in an expected visit by US Secretary of State Antony Blinken to China earlier this month being postponed. The trip was expected to help ease tensions between the two powers following a meeting between US President Joe Biden and Chinese leader Xi Jinping during the G20 Bali summit in November.

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In a comment on Thursday, Biden said he expected to speak to Xi after the balloon incident to “get to the bottom of it” but said he “doesn’t apologize” for “shooting down that balloon.”

The United States will continue to work with China, he said, reiterating his position that the US seeks “competition, not conflict.” The current situation “underscores the importance of maintaining open lines of communication” between US and Chinese diplomats and military officials, Biden added.