The US government has blacklisted Cosco Shipping Holdings Co, China’s largest marine transport company, due to its alleged ties with the People’s Liberation Army. A Federal Register filing on Tuesday identified Cosco Shipping, along with Tencent Holdings Ltd. and Contemporary Amperex Technology Co Ltd., as Chinese military companies based on a determination by the Pentagon. 

On Tuesday, Cosco's stock dropped 4.4% in Hong Kong, which was higher than the benchmark stock index for the city. The list also included Cnooc Ltd., a major oil company in China. In Hong Kong, its stock fell as much as 1.6%.  Requests for response from the two companies were not immediately answered. Both companies have faced actions from Washington in the past. In 2019, Cosco was sanctioned for transporting Iranian oil, but these sanctions were lifted in 2020. Cnooc, another Chinese state-owned enterprise, was among the first to face US sanctions and was added to a Pentagon blacklist in 2021. 

Although being on the blacklist doesn’t impose specific penalties, it discourages US companies from doing business with the listed firms. Additionally, two Chinese shipbuilders, China State Shipbuilding Corp. and China Shipbuilding Trading Co., were also added to the blacklist. The latest blacklist from the Pentagon emphasises heightened inspection of shipbuilding and maritime transportation, with geopolitical concerns taking centre stage due to the Middle East and Ukraine wars and Donald Trump's impending return to the White House. 

While the US industry has all but disintegrated over the past generation, China has the largest shipbuilding sector in the world, producing over half of all merchant vessels worldwide. According to Bloomberg Intelligence, Cnooc is interested in several additional exploration blocks in the US Gulf of Mexico, as well as two deepwater projects and two onshore shale oil and gas projects in the US. The corporation stated in a note late last month that it may reevaluate its ownership of such assets due to growing tensions with Washington.