Beijing hit back at the U.S. for adding China's largest state-owned nuclear company to a blacklist, which essentially bars all American firms from selling products to the firm.
The U.S. Department of Commerce placed China General Nuclear Power Group (CGN) to the "entity list" on Wednesday, saying the nuclear firm and three of its subsidiaries allegedly "engaged in or enabled efforts to acquire advanced U.S. nuclear technology and material for diversion to military uses in China."
In response, state-owned English newspaper China Daily published an editorial saying the U.S. government's accusation of CGN diverting technologies for military use is "just an excuse."
"The real aim is to try to thwart the country's 'Made in China 2025' initiative that seeks to let Chinese manufacturing move up the value chain, and thus contain its growth," said China Daily on Thursday.
The "Made in China 2025" initiative aims to transform the Asian giant into a superpower in high tech. The grand ambition outlines China's strategy for the battle for 5G, its push for the internet of things — which refers to devices connected to the internet — and its emphasis in developing nuclear technology as a top priority.
Since last year, the U.S. and China have been embroiled in an escalating trade war. What started as concerns about the trade deficit and theft of intellectual property, spilled into cybersecurity worries over Chinese tech products and the use of nuclear energy.
Mark Hibbs, non-resident senior fellow at global policy think tank, Carnegie Endowment for International Peace's Nuclear Policy Program said the U.S. Department of Energy announced in 2018 that exports of listed nuclear goods to Chinese firms would be "more tightly controlled."
"The latest move underscores this policy direction," Hibbs told CNBC, explaining it means that if an American company or person does business with a listed entity, they would be violating U.S. law and be liable to be prosecuted.
Any "cooperation between US firms and CGN for conventional nuclear power reactors" will presumably be denied, added Hibbs.
"The US administration has abused the blacklist in the name of safeguarding US national security and foreign policy interests," China Daily said, citing similar tactics used by the administration of U.S. President Donald Trump in curbing Chinese tech giant Huawei.
It said "most Chinese companies have already prepared for the worst since the onset of the trade war," and added that the damage made to CGN's development is "controllable."
Most importantly, the editorial added, if the U.S. wished to "strike a (trade) deal" with China, it should focus on de-escalating the heightening tensions rather than escalating it.
CGN did not respond to CNBC's enquiries on this matter as of Friday morning local time.
Correction: This story has been updated to correctly reflect that Hibbs said any "cooperation between US firms and CGN for conventional nuclear power reactors" will presumably be denied.