NEW YORK, July 5 (Reuters) - Wuxi Biologics, a
Chinese company that makes ingredients for AstraZeneca's
COVID-19 vaccine, may be a step closer to being taken off a U.S.
trade list that it landed on five months ago, wiping HK$77
billion($9.9 billion) off its market value at the time.
Chinese authorities allowed a U.S. export control officer to
conduct inspections of at least one company in the city of Wuxi
last week, a U.S. Commerce Department official said.
The official declined to identify the company or companies
involved, but a person familiar with the matter told Reuters a
check was conducted last week at Wuxi Biologics.
If the U.S. deems the check favorable, it could be removed
from the list.
The company did not respond to requests for comment. Shares
in Wuxi Biologics jumped as much as 12.2%, its highest since
Jan. 24, on Tuesday after the news.
Wuxi Biologics units in Wuxi and Shanghai were among 33
entities added to the U.S. Commerce Department's "Unverified
List" in February. The company was one of only two added to the
list with addresses in Wuxi.
The United States placed the entities on the list because it
could not conduct on-site inspections to verify information
related to them and U.S. items shipped to them.
The resumption of inspections is seen by the United States
as a positive development amid increased tensions with China
over a range of issues, including the U.S. blocking of imports
linked to forced labor in China and the possible delisting of
Chinese companies that don't meet audit requirements.
Last week, there also were renewed threats to shut down
SMIC, China's top chipmaker, if it is found to be supplying
Russia in violation of U.S. export controls.
"I do have some good news," the Commerce Department
official, who could not be identified publicly, told a
conference on export controls in Washington on Thursday.
"We were able to get some end-use check movement this week
The official added that hopefully a U.S. export control
officer would be able to go into another province, Anhui, in the
coming weeks, though that could be delayed by fresh COVID-19
U.S. inspections of Chinese companies require approval and
scheduling by China's commerce ministry, the U.S. official said.
China's zero tolerance COVID-19 protocols account for most
of the delay over the last couple of years, though there were
some opportunities to have conducted checks, the official said.
"Covid aside, it's really dependent on them to agree to
schedule the pending end-use checks that we have," the official
China's commerce ministry did not respond to a request for
In February, U.S. Assistant Commerce Secretary Matthew
Axelod said the additions to the list "signal to the PRC
government the importance of their cooperation in scheduling
But China's Ministry of Commerce slammed the development and
said Washington should correct its "wrongdoings," return to the
track of cooperation and contribute more to the global economic
During an investor day on June 16, Wuxi Biologics said that
it hoped to see the "unverified list" issue resolved for at
least one of its units by September, and for the other by the
end of the year.
The company said it had initially expected an inspection in
April, which was disrupted by COVID-19. It said it had not seen
a significant impact on actual operations from being added to
U.S. exporters can engage with parties on the unverified
list, but are required to conduct additional due diligence
before they can ship goods to them, and may need to apply for
Citi analysts said in a report on Tuesday that the company's
management had noted the result of the checks could be positive
but that they were still waiting for final confirmation.
"In our view, the potential removal of Wuxi site from the
(unverified list) would help alleviate market concerns on
geopolitical risk and boost market sentiment on the CRO
(contract research organisation) sector," they said.
(Reporting by Karen Freifeld; Additional reporting by Roxanne
Liu in Beijing and Brenda Goh in Shanghai. Edited by Kenneth Li,
Deepa Babington and Sonali Desai)