Subsidiaries of Chinese Firm Involved in Myanmar’s New Yangon City Project Blacklisted by US

By Nan Lwin 27 August 2020

YANGON—Subsidiaries of a Chinese state-owned construction company that is involved in a controversial “New City” project in Myanmar’s commercial capital, Yangon, are included in the United States’ latest “trade blacklist” of companies it says are helping Beijing build islands in disputed areas of the South China Sea.

On Wednesday, the United States added 24 Chinese companies to its Entity List, accusing them of enabling China to reclaim and militarize disputed outposts in the South China Sea. The list includes subsidiaries of China Communications and Construction Company (CCCC), including CCCC Dredging Group Co. Ltd., CCCC Shanghai Waterway Bureau and CCCC Guangzhou Waterway Bureau.

CCCC is one of the biggest builders of China’s ambitious Belt and Road Initiative (BRI) infrastructure projects along corridors stretching from Asia to Europe. In Myanmar, the company signed an agreement with the Yangon regional government-backed New Yangon Development Company (NYDC) to draw up a proposal worth US$1.5 billion (2.01 trillion kyats) to construct the initial infrastructure for the New Yangon City project across the Yangon River from Myanmar’s commercial hub. The project is one of the pillars of the China-Myanmar Economic Corridor (CMEC), which is a local element of the BRI.

In the statement on Wednesday, US Secretary of State Mike Pompeo accused the CCCC of leading destructive sand dredging and land reclamation to create outposts in the South China Sea.

Pompeo said China is using CCCC and other state-owned enterprises on the entity list as weapons to impose an expansionist agenda, adding that CCCC and its subsidiaries have engaged in corruption, predatory financing, environmental destruction and other abuses across the world.

As a result of the sanctions, the US State Department said the individuals named in the blacklist would not be permitted to enter the US, and their immediate family members may be subject to visa restrictions as well.

In a separate statement, the US Department of Commerce said the Entity List comprises persons (individuals, organizations, companies) reasonably believed to be involved, or to pose a significant risk of becoming involved, in activities contrary to the national security or foreign policy interests of the US, and to whom the export, re-export and in-country transfer of items subject to the Export Administration Regulations (EAR) are restricted.

It also said additional license requirements apply to exports, re-exports and in-country transfers of such items to listed entities, adding that the availability of most license exceptions is limited.

Despite its framework agreement with the Yangon government on the New Yangon City project, CCCC hasn’t been green-lighted for project implementation. In line with official procedures, it will have to go through the so-called “Swiss Challenge” selection process, in which other candidate firms would be invited to beat CCCC’s bid. Currently, the government is finalizing the hiring of an international consultant to assist the selection process.

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