Chinese companies hit with US trade restrictions over spy balloon incident

A jet flies by a suspected Chinese spy balloon as it floats off the coast in Surfside Beach
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By Alexandra Alper and Karen Freifeld

WASHINGTON (Reuters) -The Biden administration added 37 Chinese entities to a trade restriction list on Thursday, including some for allegedly supporting the spy balloon that flew over the United States last year, heightening tensions between Beijing and Washington.

The Commerce Department also said it was adding some units of China Electronics Technology Group to the list for allegedly trying to obtain American technology to support China's quantum technology capabilities, "which has serious ramifications for U.S. national security" due to their military applications.

Media have said state-owned China Electronics Technology Group is a top military equipment supplier.

China Electronics Technology Group could not immediately be reached for comment.

The Chinese embassy in Washington called the move "blatant economic coercion and bullying in the field of technology," and said China would resolutely safeguard the lawful rights of Chinese firms and institutions.

The announcement shows the Biden administration is continuing to punish Beijing over the spy balloon, which drifted over the United States in February 2023, fueling political outrage in Washington and prompting Secretary of State Antony Blinken to cancel a trip to China.

That month, the Commerce Department added five companies and one research institute to the entity list for supporting "China's military modernization efforts, specifically the People's Liberation Army's (PLA) aerospace programs including airships and balloons."

China's foreign ministry had said it was a weather balloon that had blown off course and accused the United States of overreacting.

The trade restriction list, known as the entity list, has been used aggressively by the United States to stem the flow of technology to China amid concerns Beijing could use it to bolster its military capabilities.

Being added to the list makes it harder for U.S. suppliers to ship to the targeted entities.

The Biden administration on Thursday also added a handful of Chinese entities to the list for trying to obtain American items for making drones to be used by the Chinese military and others for shipping controlled items to Russia.

(Reporting by Caitlin Webber, Karen Freifeld and Alexandra Alper; Writing by Alexandra Alper; Editing by Jonathan Oatis and Christian Schmollinger)