But exactly how the country will sanction a company that can do very little business with it remains to be seen.

The Motley Fool
Date: Jul 14, 2020
By: Rich Smith

China intends to impose "unspecified sanctions" against the defense contractor, Bloomberg reported this morning. The news agency quoted the Chinese Foreign Ministry as saying "China firmly opposes U.S. arms sales to Taiwan," an island nation that the People's Republic of China considers integral to its own territory. In response to the U.S. move, the foreign ministry promised to "impose sanctions on the main contractor of this arms sale, Lockheed Martin."  

It is not entirely clear that Chinese sanctions can have much effect on Lockheed Martin, however. U.S. law already limits the amount of business that Lockheed can do with China. The company's Sikorsky subsidiary sells a few helicopters to Chinese companies from time to time, but for the most part, Lockheed's high-tech defense products are already banned from sale to China. Thus, a Chinese vow to not purchase these items appears to be a bit of an empty threat.

One potential sanction that might have more bite would be if China bans the sale of components or raw materials used to produce Lockheed's weapons. Whether China will go this route remains to be seen.    [FULL  STORY]