EXCLUSIVE – Wuxi Biologics Moves to Leave US “Unverified” Business List

A US Commerce Department official said Chinese authorities gave US export control officials permission to inspect at least one company in the city of Wuxi last week.

The official declined to identify the company or companies involved, but a person familiar with the matter told Reuters the test was carried out at Wuxi Biologics last week.

If the US deems the review favorable, the company may be delisted.

The company did not respond to requests for comment.

Wuxi Biologics’ units in Wuxi and Shanghai were among 33 companies added to the US Commerce Department’s “unverified list” in February. The company is one of two listed with Wuxi addresses.

The United States added these companies to the list because it was unable to conduct on-site inspections to verify information about them and the US goods shipped to them.

The resumption of inspections is seen as a positive development by the US amid rising tensions with China over a range of issues, including the US blocking imports linked to forced labor in China and the possible delisting of Chinese companies. Does not meet audit requirements.

Last week there were fresh threats to shut down SMIC, China’s leading chipmaker, if it was found to be supplying Russia in violation of US export restrictions.

“I have good news,” a Commerce Department official, who could not be publicly identified, said Thursday at the Washington Export Controls Conference.

“Wuxi was able to get some end-use control movement this week.”

The official added that a U.S. export control official could visit another province, Anhui, in the coming weeks, though it could be delayed by new COVID-19 outbreaks.

U.S. inspections of Chinese companies must be approved and planned by China’s Ministry of Commerce, the U.S. official said.

China’s zero-tolerance COVID-19 protocols have accounted for most of the delays in the past two years, although there have been some opportunities for checks, the official said.

“Covid aside, planning for end-use restrictions pending with us depends on their agreement,” the official said.

China’s Ministry of Commerce did not respond to a request for comment.

In February, US Commerce Assistant Secretary Matthew Axelote said the addition to the list “signals to the PRC government the importance of cooperation in programming end-use restrictions.”

But China’s commerce minister criticized the development and said Washington must correct its “missteps” and return to the path of cooperation and contribute more to global economic recovery.

At an investor day on June 16, Wuxi Biologics said it hoped to resolve its “unverified inventory” issue in September and another by the end of September.

The company originally said it had planned a study in April, which was disrupted by COVID-19. He said he saw no significant impact on his actual operations from being listed.

US exporters may engage with parties on the non-vetted list, but must exercise additional due diligence before shipping goods to them, and may need to apply for other licenses.