Blacklists raise costs for all, narrow scope of dialogue

Earlier this month, the Pentagon added 65 more names to its blacklist of so-called "Chinese military companies", bringing the total to 188. This time, Alibaba, Baidu, BYD and Tencent were grouped with missile makers and shipyards on a roster that, starting June 30, bars the United States Department of Defense from signing new contracts with any of the listed companies.

A separate restriction next year would limit Pentagon purchases of goods incorporating inputs from any listed company. This means that US companies and consumers are strongly discouraged from doing business with the blacklisted companies.

In response, on Monday, China imposed a set of countermeasures against the US, placing 10 US companies on an export control list and barring government agencies from purchasing products from 46 others.

Washington calls the designations routine security vetting aimed at companies that it says are tied to China's military-industrial base. But blacklists can be counterproductive. They rarely make any nation "more secure". Rather, they raise costs, narrow the channels available for international dialogue, and feed mistrust that makes future disagreements harder to resolve.

There is also a US candor problem. Section 1260H, or the so-called "Chinese military companies" list, targets companies for contributing to what Washington calls China's military-civil fusion strategy, blurring the line between civilian commerce and military modernization. But "military-civil fusion" has long been practiced by the US, openly and by design. For example, the Pentagon's Defense Innovation Unit has a legal mandate to "accelerate the adoption of commercial technology throughout the military". Its Replicator Initiative repurposes commercial drones and software for the battlefield.

The Defense Advanced Research Projects Agency, an independent research and development agency within the US Department of Defense, has spent decades funding research that blurs the line between defense laboratories and civilian life, producing the internet and GPS along the way. None of this is secret; it is published policy.

Washington's complaint might carry more weight if the US acknowledged that a version of the same fusion is also US policy.

The costs of blacklisting reach well beyond the 188 companies named. Multinational companies in both markets must now screen suppliers, customers and partners against a growing patchwork of US and Chinese rules, a compliance burden that has little to do with security while increasing the cost of doing business. Many companies respond by duplicating supply chains rather than risk falling afoul of either government, and that redundancy raises prices. Global trade, still adjusting to years of tariff and export-control friction, absorbs another layer of it. None of this serves workers, consumers or businesses in either country, or the global economy that depends on steady commerce between its two largest players.

China has built its own legal tools to safeguard economic security since 2020, including an unreliable entity list and an Anti-Foreign Sanctions Law. The real question is not whether China can respond if pressed; it plainly can. The question is whether Washington will give good reason to rely on dialogue instead of retaliation.

Both countries hold real strengths. China's position in critical minerals and rare-earth processing underpins much of global manufacturing; the US' position in advanced semiconductors, capital markets and dollar-denominated finance underpins much of global commerce. These facts are reminders that the two economies are already deeply interdependent, and that interdependence is best managed through negotiation, not lists that try to isolate the other country.

The way ahead is well understood. Chinese leaders have long framed the bilateral relationship around mutual respect, peaceful coexistence and win-win cooperation, language that leaves ample room for positive outcomes. The recent China-US summit showed that high-level dialogue can still produce real momentum. The question is whether Washington builds on the positive momentum or lets a blacklist undercut it.

A more productive US approach would look different from this month's list: narrowing designations to companies, boosting direct military ties rather than letting blacklists grow; building in review and sunset provisions instead of a one-way ratchet; and pairing any future step with a genuine offer to negotiate the underlying concerns through structured economic dialogue.

China and the US are not short on shared interests — in technology, trade and the stability the rest of the world quietly depends on. The opportunity for a steadier relationship is real, and it has not closed. What happens next is largely Washington's choice.

The author is a principal consultant at Midgley & Co, and adjunct associate professor in the Security Studies Program at Georgetown University in Washington, DC.

The views do not necessarily reflect those of China Daily.

If you have a specific expertise, or would like to share your thought about our stories, then send us your writings at opinion@chinadaily.com.cn, and comment@chinadaily.com.cn.