China to Sanction Lockheed Martin, Cut It Off From Its Rare Earths

Won't affect Lockheed Martin much but could give Boeing pause

China will impose sanctions on US-based arms producer Lockheed Martin, the main contractor of the recertification of its Patriot Advanced Capability-3 (PAC-3) air defense missiles of the island of Taiwan.

The sanctions will likely feature the cut-off of material supply including rare earths, which are crucial to advanced weapons production, and business restrictions on Lockheed Martin’s suppliers that have business in the Chinese mainland, Chinese aviation industry experts said on Tuesday.

The US on Thursday announced the approval of an arms deal to Taiwan involving the recertification of PAC-3 air defense missiles at an estimated cost of $620 million.

Chinese Foreign Ministry spokesperson Zhao Lijian said at a regular press conference on Tuesday that China had decided to take necessary measures to impose sanctions on the US company.

Zhao did not elaborate on the details of the sanctions.

Lockheed Martin is an arms producer focused on advanced weapons and equipment, and China does not have many direct business with the company, Wang Ya’nan, a Chinese aviation industry expert and chief editor of Aerospace Knowledge magazine, told the Global Times on Tuesday.

However, it is possible that China will restrict the supply chain of Lockheed Martin, as the company would inevitably import raw materials including non-metals, metals and minerals including rare earths from China, via its suppliers who do have businesses with China, Wang said.

Other component manufacturers and system designers that are related to China could also be restricted from doing business with Lockheed Martin as part of the sanctions, Wang said.

Many of Lockheed Martin’s key products, including F-35 fighter jets and Patriot missiles, rely on components made with rare earths, analysts said. China is the world’s largest rare-earth exporter, and the US imports about 80 percent of its rare-earth needs from China, reports said.

Also, the UK’s defense ministry revealed in 2019 that Exception PCB, a Chinese-owned company, was making circuit boards for F-35 fighter jets, the UK’s Sky News reported at the time. The parts “control many of the F-35’s core capabilities,” the network reported.

Though not large scale, Lockheed Martin has some business in China in new energy, civilian aviation and space industries, according to Weihutang, a program on military affairs affiliated with China Central Television.

“Actual effects aside, this is a political statement. US wantonness won’t be unchecked when it comes to China,” He Weiwen, an executive council member of the China Society for World Trade Organization Studies, told the Global Times on Tuesday.

Lockheed Martin has thus become the first US company since the start of the China-US trade war to be directly designated by Chinese authorities for sanctions, according to He.

Previously, although China has said it would roll out an unreliable entity list as a response to foreign governments’ and companies’ crackdowns on Chinese companies, no actual foreign company had been named by a top Chinese government official, He noted.

Wang said that the sanctions will deter other US arms firms from selling arms to the island of Taiwan, and unlike Lockheed Martin, companies like Boeing may get hit even harder in potential sanctions because they have more direct business ties with China.

This is not the first time that China has imposed sanctions on US arms producers that are involved in weapons sales to the island of Taiwan.

For instance, after the US government approved a plan to sell $2.22 billion of arms to Taiwan in July 2019, the Chinese Foreign Ministry said that China would impose sanctions on US enterprises participating in the sales. The companies included Raytheon, General Dynamics, and BAE and Oshkosh, according to media investigations.

China is resolutely against US arms sales to the island of Taiwan and any form of military connection between the island and the US, Zhu Fenglian, a spokesperson for the Taiwan Affairs Office of the State Council, China’s cabinet, said on Tuesday.

The attempts of the Democratic Progressive Party authority to seek “independence by force” will not succeed, and will only sabotage peace and stability and bring about a bigger catastrophe to Taiwan people, Zhu warned.

Source: Global Times

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