Firms must pay cost of breaking contracts

China has announced it will create an "unreliable entity list" for those foreign companies that violate business contracts with their Chinese counterparts. Beijing's move is apparently in response to the United States putting an increasing number of Chinese companies on its Entity List on the pretext of safeguarding its national security.

For example, Washington said Huawei and five other Chinese high-tech companies pose a threat to "US security" and put them on the Entity List while asking US companies not to conduct business with any of them. But after the two heads of state met on the sidelines of the G20 Summit in Osaka last month and decided to resume the bilateral talks, the US has agreed to allow US enterprises to supply components to Huawei.

Thanks to economic globalization, international trade has become deeply intertwined, with most companies specializing only in some areas and outsourcing their requirements. As a result, different companies contribute differently to the global production chain.