China lifted sanctions on an American company, for the first time

Viasat(卫讯公司), a U.S. satellite communication company, becomes the first U.S. company to be removed from China's sanction list after being restricted by the Chinese government based on the anti-foreign sanction law.

Viasat is a supplier of military communications equipment to Taiwan. In 2007, Viasat received a $12 million order for Multifunctional Information Distribution System (MIDS) terminals for Taiwan's military.

On January 7, 2024, the Chinese Foreign Ministry announced plans to hit five US defense companies with sanctions due to American arms sales to Taiwan. This move follows a series of retaliatory actions after the US State Department approved around $300 million in military sales to Taiwan back in December. According to a statement on the Foreign Ministry's website, a spokesperson confirmed the sanctions and named the five major defense companies targeted, with Viasat being one of them.

The sanctions involve freezing Viasat’s assets in China and prohibiting Chinese entities from engaging in business with it. Given Viasat's various business interests in China, including a deal with China Satellite Communications Co. (China Satcom) to provide inflight WiFi and equipment supply agreements with Chinese airlines, the sanctions may have disrupted these deals and hurt Viasat.

Article 8 of China's Anti-Foreign Sanctions Law stipulated that

"When the circumstances on which the countermeasures are based change, the relevant departments of the State Council may suspend, modify, or cancel the relevant countermeasures."

This is somewhat reminiscent of the delisting procedures from various sanction lists by the US Treasury and Commerce, giving Beijing an important lever to lift sanctions on some American companies. However, such removal of sanctions would be highly politicized and seems unlikely without high-level authorization given the increasing geopolitical tensions between the US and China, as well as the impulse on both sides to retaliate against each other's companies.

The timing of Beijing lifting sanctions on Viasat is quite intriguing. A group of top US execs, including FedEx CEO Raj Subramaniam, met with Chinese Vice-Premier He Lifeng and Foreign Minister Wang Yi in China on Monday. Beijing is hoping this influential lobby group can help US businesses take a significant role in China’s economy.