US sanctions Chinese company that built military outposts in South China Sea

The Trump administration is cracking down on China Communications Construction Company affiliates in retaliation for their help expanding artificial islands in the South China Sea, where Beijing has made contested sovereignty claims.

“The PRC must not be allowed to use CCCC and other state-owned enterprises as weapons to impose an expansionist agenda,” Secretary of State Mike Pompeo said Wednesday, using an acronym for the People’s Republic of China.

“CCCC led the destructive dredging of the PRC’s South China Sea outposts and is also one of the leading contractors used by Beijing in its global ‘One Belt One Road’ strategy,” Pompeo said. “The United States will act until we see Beijing discontinue its coercive behavior in the South China Sea, and we will continue to stand with allies and partners in resisting this destabilizing activity.”

State Department officials imposed visa restrictions on “individuals responsible for, or complicit in” China’s militarization of the South China Sea, a vast shipping area for the global economy that has substantial military significance in a prospective military conflict between China and the U.S. In tandem, the Commerce Department issued new regulations that restrict the export of American products to the company.

“So it has the result of ensuring that, going forward, any transfer of such items to these parties undergoes U.S. Government review and, as a practical matter, the licensing policy is presumption of denial for any such proposed exports, re-exports, or in-country transfers,” a Commerce Department official told reporters Wednesday.

That licensing regulation could weaken the supply chains of a company that American officials regard as the vanguard of Chinese General Secretary ’s vaunted Belt and Road Initiative. CCCC has played a part in high-profile overseas infrastructure programs, including one that resulted in China laying claim to control over a port in the island of Sri Lanka, to the alarm of security officials in neighboring India and the U.S.

A senior State Department official said that the sanctions would help with “shining light on these activities and on the association between the kind of bullying we see in the South China Sea and the kind of bullying that we see around debt-trap financing of ports around the world,” even if the particular measures were in response to the narrower controversy over the South China Sea.

“We think it is important for folks all around the world to understand this,” the official told reporters.

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