As President Trump and VP Mike Pence (recent COVID-19 infections be damned) fan out across the country for a last-minute pre-Election Day push to get out the vote, Beijing is adding to its long-promised retaliation for TikTok, the Xinjiang sanctions, all President Trump’s COVID-19-related China bashing and – most importantly – Taiwan.
After Beijing sanctioned Lockheed Martin over its involvement in “Torpedoes for Taiwan”, the CCP is following up with more economic attacks on American defense contractors, guaranteeing that the Chinese response, and its attendant economic impact, will be elevated to an important talking point and – more importantly – another risk factor for already-uneasy markets, struggling to digest the political uncertainty combined with new record numbers of COVID-19 cases in the US and Europe.
According to Reuters, Beijing has decided to impose sanctions on Boeing’s defense unit, Raytheon and (again) Lockheed. The news was announced by Ministry of Foreign Affairs spokesman Zhao Lijian. He didn’t elaborate on what the sanctions will entail.
The sanctions come as the State Department approves the sale of three weapons systems to Taiwan, including sensors, missiles and artillery worth some $1.8 billion as the Trump Administration throws caution to the wind and goes all-in on beefing up Taiwan’s defense capabilities, even as Beijing adopts increasingly belligerent rhetoric about the “red line” that is Taiwan.
“To safeguard our national interests, China decided to take necessary measures and levy sanctions on U.S. companies such as Lockheed Martin, Boeing Defence, and Raytheon, and those individuals and companies who behaved badly in the process of the arms sales,” he said.”
Though it’s not the “just war” China has promised, it’s possible that US equities could take a hit if we hear more concrete details from the Chinese. Markets wobbled after China announced its last round of sanctions against Lockheed, though whatever Beijing did, it doesn’t look like it had much immediate impact on Lockheed’s bottom line, according to its latest earnings report, released roughly a week ago.