US imposes trade restrictions on Chinese companies following spy balloon incident

China trade crackdown: The Biden administration targeted 37 Chinese entities with trade restrictions on Thursday, escalating tensions between Beijing and Washington. Amongst these are firms allegedly linked to the spy balloon incident that occurred in the United States last year.

The Commerce Department cited several units of China Electronics Technology Group for purportedly seeking American technology to advance China's quantum capabilities, with potential military applications raising concerns for US national security.

Responding to the action, the Chinese embassy in Washington denounced it as "blatant economic coercion and bullying in the field of technology," asserting China's focus on defending the legitimate rights of its companies and institutions.

Balloon diplomacy fallout

The Biden administration's move highlights its continued response to the spy balloon incident, which stirred political controversy in Washington and led to Secretary of State Antony Blinken cancelling a scheduled trip to China in February 2023.

Previously, in the same month, the Commerce Department had added five companies and one research institute to its entity list for their alleged support of China's military modernisation efforts, particularly in aerospace programmes.

China had dismissed the incident as involving a weather balloon that had veered off course, accusing the US of an exaggerated response.

The entity list, utilised by the US to curb technology exports to China over military concerns, imposes obstacles for American suppliers in dealing with the targeted entities.

In addition to the entities linked to the spy balloon incident, the Biden administration added Chinese firms to the list for attempting to procure American items for drone manufacturing and for shipping controlled goods to Russia.

(With Reuters Inputs)