US sanctions over South China Sea will not affect blacklisted Chinese construction giant CCCC, company says

US sanctions over South China Sea will not affect blacklisted Chinese construction giant CCCC, company says

  • US last week blacklisted 24 Chinese state-owned companies for their roles in helping ‘militarise’ outposts in disputed parts of the South China Sea
  • China Communications Construction Company says it will conduct a deeper assessment to determine any unknown impacts

The dredging business of state-owned engineering giant China Communications Construction Company (CCCC) will not be adversely affected by fresh US sanctions, but questions remain as to whether there could be reputational damage to its Australian and US subsidiaries, including a marine engineering group in Texas.

On Wednesday, the United States Department of Commerce blacklisted 24 Chinese state-owned companies, including five CCCC dredging subsidiaries, for their roles in helping the Communist Party “militarise” outposts in the contested South China Sea.

The blacklist, known as the Entity List, which also includes about 300 other Chinese entities including telecom company Huawei, forbids US firms from doing business with the listed companies or exporting products to them unless they receive a special licence to do so.

CCCC, whose international investment arm is listed on the Hong Kong stock exchange, has since said in a statement that its five blacklisted subsidiaries, including the China Communications Construction Company Dredging Group, did not have any US business and would not be financially affected by the sanctions.

“According to the 2019 annual report, the new contract value and revenue of the dredging business accounts for approximately 6 per cent of the total new contract value and revenue of the company. The company mainly conducts the business of waterway dredging, land reclamation and environmental dredging domestically,” it said.

“The overseas dredging business accounts for a relatively small portion, and no dredging business is conducted in the US by the company.

“In addition, the core equipment for the dredging business of the company did not use any technology supplied by or imported from US enterprises.”

CCCC said, however, that it would conduct a deeper assessment of its business to determine any unknown impacts.

The sanctions follow the intensifying disputes between the two countries in the South China Sea, which has been cited as a flashpoint for possible military conflict. In 2016, satellite images showed a subsidiary of CCCC Dredging operating giant barges digging sand from the seabed and piling it onto remote coral atolls in the South China Sea, including Mischief Reef, Subi Reef and Fiery Cross Reef, which are also claimed by the Philippines and Vietnam.