global trade

US adds Chinese entities to red-flag export list, WuXi Bio shares plunge

Reuters
US adds Chinese entities to red-flag export list, WuXi Bio shares plunge

TRADE. The Department of Commerce building in Washington, January 26, 2022.

Joshua Roberts/Reuters

The entities include listed companies, universities, as well as aerospace and electronics suppliers

WASHINGTON, USA – The US Commerce Department said on Monday, February 7, it had added 33 Chinese entities to its so-called “unverified list,” which requires US exporters to go through more procedures before shipping goods to the entities.

The department said it was taking the step as it was unable to verify the legitimacy and reliability of those entities in relation to their use of US exports. The entities included listed companies, universities, as well as aerospace and electronics suppliers.

China’s commerce ministry hit out at the US decision, saying on Tuesday, February 8, Washington should correct its “wrongdoings” and the United States should return to the track of cooperation and contribute more to the global economic recovery.

Stock in WuXi Biologics, whose units in Wuxi and Shanghai were added to the unverified list, plummeted more than 25% on Tuesday to wipe HK$77 billion ($9.9 billion) off its market value. Trade in shares of the company, which makes ingredients for vaccines including AstraZeneca’s COVID-19 vaccine, was later halted.

WuXi Bio said that while it had imported manufacturing equipment subject to US export controls, Washington’s move would have no impact on its business or ongoing services to global partners.

Chief executive officer Chris Chen told an investor call on Tuesday that WuXi Bio was prevented by US export controls from reselling or re-exporting items purchased from the United States but that the Commerce Department had been unable to conduct checks that WuXi Bio was in compliance due to the pandemic.

“Because of COVID-19, they have not been able to travel here in the last two years to verify us, so they have put us on this ‘unverified list,'” he said.

“The affected companies are only in Shanghai and Wuxi and our factories in Shanghai and Wuxi have already been built, so there is no longer any need to buy large amounts of hardware for bioreactors.”

The company’s lawyers plan to negotiate with the US Commerce Department, he added.

Shares in Hymson, a manufacturer of laser and automation equipment, slid more than 7% after a unit was added to the list.

Hymson said in a statement that the addition would not have any significant or adverse effect on its operations or financial situation. It added that it would evaluate what impact the listing could have on the company’s future development. – Rappler.com

$1 = 7.7947 Hong Kong dollars