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Pentagon blacklists China chip maker SMIC and oil producer CNOOC

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Aerial view of the Pentagon building photographed on September 24, 2017.

Bill Clark | CQ appeal group | Getty Images

WASHINGTON – China's largest chip maker and national offshore oil and gas producer was blacklisted of suspected Chinese military companies on Thursday, the Pentagon said in an evening statement.

The Ministry of Defense designated a total of four companies as owned or controlled by the People's Liberation Army.

Semiconductor Manufacturing International Corp. China National Offshore Oil Corp. China Construction Technology Co. Ltd. China International Engineering Consulting Corp.

The additional four companies added on Thursday bring the total blacklisted companies to 35.

US officials have long complained that Chinese companies are obligated to the People's Republic of China and collect confidential information on behalf of the People's Liberation Army. The Chinese Communist Party previously stated that it was not engaged in industrial espionage.

The Chinese embassy in Washington did not immediately respond to CNBC's request for comment.

The move is likely to escalate tensions between the world's two largest economies and add to the list of pressing geopolitical issues awaiting President-elect Joe Biden.

In September, the Pentagon announced it was having discussions about whether to add SMIC to the Department of Commerce's list of companies, essentially preventing these companies from receiving certain US-made goods.

Continue reading: The US sanctions against the chip maker SMIC were at the center of China's technical ambitions

That same month, the US Department of Commerce informed some companies that they would need a license before they could supply goods and services to SMIC after they concluded that there was an "unacceptable risk" that it was supplying them Equipment that could be used for military purposes. SMIC relies heavily on US suppliers.

SMIC is seen as a key player in China's efforts to boost the domestic semiconductor industry, a goal accelerated by the US-China trade war. The introduction of export controls on SMIC would affect US companies selling chip making technology to Chinese manufacturers.

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Katherine Clark