Speciality Chemicals Magazine JUL / AUG 2026 | Página 5

China in your hand

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JUL / AUG 2026
Amidst all the headlines about the war and blockades in the Persian Gulf, something else that may have bigger long-term implications for the pharmaceuticals and related industries happened in June. It also reflected the wider tensions between China and the US that cannot help but impact the whole of the chemicals industry.
Under the National Defence Authorisation Act, the US Department of Defense can designate a firm as a‘ Chinese military company … operating directly or indirectly in the United States’ and block it from securing contracts with US government funding under the Biosecure Act. The term is broadly defined to include any thought to be is directly or indirectly owned, controlled by, affiliated with or acting( officially or unofficially) as an agent or on behalf of specified Chinese military, security or other government bodies.
On 8 June, the department added 65 new entities to the 1260H List of affected companies, including WuXi AppTec. The rationale was that the firm is indirectly owned by the State-owned Assets Supervision and Administration Commission of the State Council( SASAC), an institution that acts as the state’ s owner for centrally administered, non-financial state-owned enterprises and which exercises shareholder functions on behalf of the State Council. SASAC itself is affiliated indirectly with the People’ s Liberation Army and a civilian government agency that handles defence matters.
The company came out fighting, filing a complaint at the US District Court for the District of Columbia three days later. In open letters to suppliers and customers, the three co-CEOs stated that the firm is“ acting swiftly and decisively, as we are confident this designation is wrong and unsupported by the facts or legal criteria”.
“ WuXi AppTec is not a Chinese military company- not based on an objective review of the facts, and not under the statutory designation criteria for the Section 1260H list under US law,” they said, adding that no member of the board or the senior executive team has military or political party affiliation and the firm has never been placed on any government sanctions list. In addition, they noted, the Biosecure Act only imposes restrictions on work performed under future government contracts or otherwise involving government funding, and this after a‘ grandfather’ period of five years that is expected to start in mid-2028.
The Chinese Ministry of Foreign Affairs subsequently called the Section 1260H List“ yet another example of the US overstretching the concept of national security and formulating discriminatory lists to go after Chinese businesses”. It has vowed to take“ necessary measures” to defend their rights and interests but has yet to retaliate directly.
Whilst WuXi AppTec is almost certainly the largest CDMO based in China and marketing its services globally, there are others. And of course the number of companies active in this industry as raw material suppliers and service providers runs into the hundreds, if not thousands.
Given that the state is actively involved at all levels of Chinese industry, there would appear to be nothing to stop any company being added to the list. Having no indirect connection at all to the military side of the state would be hard to prove, one imagines. It would be very easy for the Act to be used as an instrument of trade war.
Further developments are awaited. One thing that is certain that the implications will go much wider than one company and that the unintended consequences will probably be as significant as the direct ones.
Dr Andrew Warmington
EDITOR – SPECIALITY CHEMICALS MAGAZINE
SPECCHEMONLINE
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