Suez Canal to hike transit tolls

Tolls for vessels using the Suez Canal are set to rise by 15% next year (2023) with the exception of dry cargo and cruise ships which will increase by 10%.

The transit toll increases from January 2023 were announced at the weekend by Adm. Ossama Rabiee, Chairman and Managing Director of the Suez Canal Authority (SCA).

According to the SCA the increases are based on a number of pillars, the most important of which is average freight rates for various times of vessels.

“In this regard, there were considerable and consecutive increases within the past period; especially in container ships' freight rates, compared to those recorded before the Covid-19 pandemic which will be reflected in the high operational profits that will be achieved by navigational lines throughout 2023 in light of the continued impact of the disturbances in global supply chains and the congestion in ports world-wide, as well as the fact that shipping lines have secured long-term shipping contracts at very high rates,” said Adm Rabiee.

The much-improved performance of the tanker market was also noted by the SCA with daily crude tanker charter rates up 88% compared to average rates in 2021, average daily rates for LNG carriers increasing by 11% compared to the previous year.

Tolls for all vessel types including tankers and container ships will increase by 15%. The only exceptions are dry bulk ships, where charter rates are currently extremely low and cruise ships, a sector still recovering from an almost total shutdown during the pandemic.

It comes at a time when ship operators already face rising fuel costs. However, the increased savings made on higher fuel costs by using the shorter route through the Suez Canal was used in part to justify the toll increases.

The Suez Canal offers a significantly shorter route between Asia and Europe with the alternative involving sailing round the Cape of Good Hope.

When the Suez Canal was blocked by the grounded containership Ever Given in March 2021 analysts Sea Intelligence estimated on the basis of vessels sailing at 17 knots transiting via the Cape of Good Hope would add seven days to a Singapore to Rotterdam voyage, 10 days to West Mediterranean, a little over two weeks to East Mediterranean and between 2.5 – 4.5 days to the US East Coast.

Adm Rabiee also noted that the increases are inevitable given current global inflation of over 8% and increasing operational and navigational costs for the Suez Canal.

“It was emphasized as well that the SCA adopts a number of mechanisms with the sole aim of having its pricing policies cope with the changes in the maritime transport market and to ensure that the Canal remains the most efficient and least costly route compared to alternative routes,” the Authority said.

These take the form of rebates of up to 75% for specific sectors of shipping for defined periods if market conditions result in the canal becoming less competitive.

 

Iran joins Shanghai Cooperation Organization

The 22nd Shanghai Cooperation Organization (SCO) summit ended on Friday on a positive note. Iran officially joined the SCO, and all the participants signed the Samarkand Declaration in the end.

Iran's full membership in the SCO was announced by the President of Uzbekistan, which was applauded by the participants. China, Russia, India, Iran, Uzbekistan, Kazakhstan, Belarus, Turkey, Azerbaijan, Kyrgyzstan, Pakistan, Mongolia, Tajikistan and Turkmenistan attended the 22nd SCO summit.

Iran’s President Ebrahim Raisi spoke at the second day of the summit on Friday, stressing that maximum interaction and relation with the countries of the region, including the SCO states. He also said effective presence in regional and international orders are the focus of Iran’s foreign policy.

Uzbekistan, which chaired the SCO for one year, will hand over the SCO presidency to India. India will assume the next SCO rotating presidency and hold the next meeting of the council of heads of state of the SCO in 2023.

During the summit, an agreement was reached on admitting Bahrain, the Maldives, the UAE, Kuwait and Myanmar as new dialogue partners. Relevant parties noticed that MOUs granting Egypt, Saudi Arabia and Qatar the status of SCO dialogue partners had been signed.

The Samarkand Declaration which was signed by all countries participating in the summit underlined that the world is undergoing global changes and has entered a new period of rapid development and major transformation, with the trend towards a multi-polar world intensifying, countries increasingly interdependent, and informatization and digitalization accelerating. 

“Based on the principles of the Charter of the Shanghai Cooperation Organization, the member states oppose grouping, and ideological and confrontational approaches to solving international and regional issues, and stick to a coordinated manner to security threats and challenges in traditional and non-traditional fields,” the declaration added.

Considering the views of the SCO member states, the declaration reaffirmed that it is of great practical significance to work together to build a new type of international relations featuring mutual respect, fairness and justice as well as win-win cooperation, and to build a community with a shared future for mankind.

In the declaration, the SCO states also emphasized the continuous implementation of the Joint Comprehensive Plan of Action (JCPOA) and within the framework of UN Security Council Resolution 2231.

The SCO members also called on the JCPOA parties to commit to their obligations in line with the comprehensive, full and effective implementation of the JCPOA.

“The member-states stand for respecting the right of the people of all countries to independently choose their own paths of political, economic and social development,” according to the declaration.

The SCO emphasizes continuous implementation of the Joint Comprehensive Plan of Action (JCPOA) within the framework of UN Security Council Resolution 2231.

They also reaffirmed that differences and disputes between countries should be resolved peacefully through dialogue and consultation.

Elsewhere in the declaration, the member-states reiterated their steadfast commitment to combating terrorism, separatism and extremism.

They pointed out that the interference in the internal affairs of other countries under the pretext of combating terrorism and extremism is unacceptable, as well as the use of terrorist, extremist and radical groups for one's own purposes.

The member states underlined the key role of the United Nations in responding to threats in the information space, calling for creating a safe, fair and open information space on the basis of respect for sovereignty and non-interference in the internal affairs of other countries.

The member states that are signatory to the Treaty on the Non-Proliferation of Nuclear Weapons are committed to strict compliance with the provisions of the treaty and consolidating the international nuclear non-proliferation regime, according to the declaration. 

The member-states also underlined that the only solution to regional conflicts is through political and diplomatic means “on the basis of adherence to universally recognized principles and norms of international law.”

They noted that the coordination of the situation in Afghanistan at an early date is one of the important factors for maintaining and consolidating security and stability in the SCO region. The SCO reaffirmed support for Afghanistan to become “an independent, neutral, united, democratic and peaceful country, which is free of terrorism, war and drugs.”

China reaps energy windfall as West shuns Russian supplies

China is buying more of less expensive energy supplies from Russia, reaping the benefits of a plunge in European purchases. Beijing emerges the ready buyer when Moscow is searching alternative markets.

The growing cooperation is likely to deepen further after Chinese President Xi Jinping's meeting with Russia's Vladimir Putin in Uzbekistan, a boon for both the countries. 

China has gained access to cheaper energy while Russia is able to offset losses from the European Union and other allies scaling back on purchases of Russian exports due to the recent imposition of the sanctions.

Closer Chinese-Russian ties have also promoted the use of their yuan and rouble currencies in commodities trade, lessening reliance on the US dollar.

China, the world's largest energy consumer and top buyer of crude oil, liquefied natural gas and coal, has imported 17% more Russian crude between April and July as compared to the same period a year ago.

It has also bought over 50% more LNG and 6% more coal from Russia during the same period while electricity imports from Russia, mainly via a cross-broader transmission line connecting northeast China and Russia's Far East, soared by 39%.

China's oil, gas, coal and electricity purchases from Russia amount to US$43.68 billion so far this year.

Russian crude oil gains market share in China despite decline in overall imports

Cheaper Russian energy supplies are helping to control inflation in China, where the economy narrowly avoided contracting in the second quarter amid COVID-19 lockdowns.

The recent meeting between Xi and Putin is likely to fortify China's ties with Russia in energy trade for mutual benefit, particularly at a time when Russia is grappling with intensified western sanctions, while China is in need of low-cost energy to shore up its sagging economy.

Russia became China's top crude supplier from May to July, accounting for 19% of China's imports, versus 15% in the same period of 2021. Russia's share could grow to more than 20% this year.

China saved about US$3 billion in buying Russian oil. At an average, China paid about US$708 per ton for Russian crude while the value of imports from the rest of countries was US$816 per ton.

For LNG, China's imports from Russia rose 26% in the first seven months as compared to the same period a year ago, while exports jumped to 66,798 tons in July, the highest since 2019, on re-exports to Europe and Japan.

"China is taking advantage of the disrupted trade flows, including by buying discounted Russian oil and LNG cargoes, while swapping out alternative volumes back into Europe at higher prices, delivering a profitable trade," said Saul Kavonic, head of Integrated Energy and Resources Research at Credit Suisse.

China also has long-term incentives for Russian supply as it strives to meet new carbon emissions targets and boosts gas consumption. That prompted a February deal for a new pipeline from Russia to start in the next two to three years.

China's coal imports from Russia jumped to their highest in at least five years in July, as it bought discounted coal while Europe shunned Russian cargoes ahead of a ban that came into force on August 11, 2022

Russian thermal coal with a heating value of 5,500 kilocalories (kcal) traded around US$150 a ton on a cost-and-freight basis in late July, while coal of the same quality at Australia's Newcastle port was assessed at more than US$210 a ton on a free-on-board (FOB) basis.

China has increased coal imports from Russia although it cut back overall imports of the fuel

Though Russian supplies meet only about 1% of Chinese needs, some traders expect more Russian coal to arrive in the fourth quarter when utilities build stocks for the winter heating season.

Analysts said that while the gains for China are clear, Russia remains more reliant on the trade than China.

It is apparent that Russia can no longer rely on its major energy export markets in Europe for the foreseeable future, and the redirection of its energy and commodity exports towards the East will gather pace.

 

India levies 20% export duty on rice

Reportedly, India has slapped a 20% export duty on a number of rice grades to discourage the shipment of the grain to tame prices in the domestic market, a move that poses repercussions for importing countries.

India has imposed the tax on the exports of paddy, husked rice and semi-milled or wholly milled rice effective immediately.

The move raises concerns regarding the impact on the prices of rice in Bangladesh, which slashed import duty on rice to 15% to encourage private imports and contain prices.

It came less than two weeks after a dry spell affected the cultivation of Aman, the second-biggest source of grain for the country after Boro.

“This is uncomfortable news for us because the private sector is supposed to import a lot of rice. We are also supposed to import 100,000 tons of rice under a government contract,” said Md Ismiel Hossain, Food Secretary.

The food ministry is looking for alternative sources.

Bangladesh government has signed a contract to buy 230,000 tons of rice from Vietnam. The cabinet recently approved a plan to buy 200,000 tons rice from Myanmar.

“We are trying to import rice from Thailand. Recently, they have responded positively,” Hossain said.

Bangladesh, the world’s third-biggest producer of rice, first cut the import duty on rice to 25% from 62.5% to increase the supply to cool off rice prices in the fourth week of June amid repeated floods.

Since then, the government has permitted private firms to import more than one million tons rice, mostly from India.

Lately, prices of fine rice declined 3.65% in Dhaka city. But the price of coarse grain, a benchmark followed by the government to track the price of the staple, has gone up by 1.2%, according to the Trading Corporation of Bangladesh.

Chitta Majumder, Managing Director of Majumder Group of Industries said the move by India may not raise the import cost of his firm as it has placed orders for the rice grades that have not drawn any fresh levy.

“But if the export duty is slapped on the rice imported by others, the local market may become unstable,” he warned.

The tax would discourage buyers from making purchases from India and prompt them to shift towards rivals Thailand and Vietnam, which have been struggling to increase shipments and raise prices, reports Reuters.

India has excluded parboiled and basmati rice from the export duty, but white and brown rice will draw the duty, which accounts for more than 60% of India’s exports, said BV Krishna Rao, President of the All India Rice Exporters Association.

India has been the world’s largest rice exporter in the last decade. Its export earnings grew 9%YoY to US$9.6 billion in 2021-22.

Out of the 21 million tons rice shipment in 2021-22, India exported more than 17 million tons of non-basmati rice and the rest of the volume was aromatic and long grain basmati rice, data from the Indian Commerce Ministry showed.

In terms of volume, Bangladesh, China, Benin and Nepal are major export destinations of Indian rice.

India’s rice production in the 2022-23 could decline to 128.5 million tons mainly because of deficiency in monsoon rains, especially in eastern India where rice planting has shrunk. This could be the first decline in rice production since 2015-16.

The fresh levy on rice exports came four months after India imposed strict curbs on the shipment of wheat due to depleting domestic stocks.

 

Growing Arab Israel Military alliance and Iranian Response

Lately, the Israel Defense Forces (IDF) Chief of Staff Aviv Kochavi announced preparations for a potential upcoming military operation, foreshadowing a possible move against Iran.

Kochavi’s announcement came shortly after Israel and Foreign Ministers of four Arab nations — Morocco, Egypt, the UAE, and Bahrain — along with US Secretary of State Antony Blinken, met at the Negev Summit in the Israeli desert to lay the foundation for a strategic military alliance to deter "Iran and its associated militias," as the then Israeli Foreign Minister Yair Lapid put it.

The conflict between Iran and other regional states, including both Israel and Arab nations, spans over four decades. The battle for dominance in the Middle East began in 1979 with the Islamic Revolution in Iran.

The former supreme leader of Iran, Ayatollah Ruhollah Khomeini, declared Iran to be the legitimate nation of Islam, and began a campaign to export the revolution, as he believed it should be used as a model for other nations in the region. He thought that, through mass mobilization, Islamic values would triumph over corruption, repression, and Western influence.

The Islamic Republic believed that it could destabilize the region and rebuild it in its image. "Our revolution will not win unless it is exported," said Abolhassan Banisadr, the Islamic Republic’s first president.

 "We are going to create a new order in which deprived people will not always be deprived," he stated, referring to Shi’a Muslims. The new regime used this cause as a veneer for its efforts to further its ideological, geopolitical, and economic ambitions.

In response to Iranian expansionism, six Persian Gulf states — Saudi Arabia, the UAE, Kuwait, Oman, Bahrain, and Qatar — formed the Gulf Cooperation Council (GCC) in 1981. Saudi Arabia and Kuwait, along with other Gulf states, supported Iraq's Saddam Hussein in a full-scale invasion of Iran in late 1980, driving Iran and Arab nations further apart. 

Iran has successfully kept this growing regional conflict outside its borders by starting proxies in weaker states situated between it and its rivals. Iran has been accused of meddling in Lebanon, Syria, Iraq, and Yemen's domestic affairs and helping pro-Iranian actors gain or remain in power.

The result has been to undermine the regional order, and the Middle East is now home to several failing states, civil wars, and major humanitarian crises.

In addition, the Islamic Republic's belligerent expansionism has pushed Arab nations and Israel closer to each other, slowly at first but much more rapidly in recent years. 

Iran presents a substantial military threat

Tehran’s missile and drone capabilities exceed those of nearly all of its regional adversaries and it has embraced unmanned aerial vehicles (UAVs), significantly enhancing its air superiority. Former CENTCOM Commander Gen. Kenneth F. McKenzie Jr. warned that, thanks to Iran's drone program, the US is "operating without complete air superiority” for the first time since the Korean War.

The Islamic Revolutionary Guard Corps (IRGC) shares these capabilities with Iranian-backed militias — including Hezbollah, Islamic Jihad, Hamas, the Popular Mobilization Forces, and the Houthis — to be used in proxy wars or in attacks within the borders of Israel, Saudi Arabia, and the UAE. 

In recent years, and especially since the signing of the Abraham Accords in late 2020, Israel has proven to be a viable ally for Arab nations facing the threat of Iran.

In mid-February 2022, Israeli forces carried out a devastating attack on an airbase in western Iran, destroying hundreds of Iranian drones. The Times of Israel reported that Israel is cooperating with Middle East allies to build a “joint defense system” to counter Iranian missiles and drones.

Like the Middle East Strategic Alliance (MESA) proposed by the Trump administration, the alliance will be modeled after the North Atlantic Treaty Organization (NATO). The strategic alliance will focus on shared air defenses and pave the way for sharing intelligence and military operational plans to prevent attacks. 

Information that comes out of Tehran is strictly controlled; nevertheless, there are other sources from which we can learn about Iran's response to this new alliance.

In 2018, Ayatollah Ali Khamenei accused Saudi leaders of treason against the world of Islam for cooperating with the U.S. and Israel. Even though Iran has never declared war on Saudi Arabia, there have been hundreds of Houthi attacks on the kingdom, striking oil facilities and civilian areas. Saudi Arabia's Ministry of Energy has condemned the Islamic Republic for enabling and arming the Houthis. While Iran tries to mask its actions against other Muslim nations, it does not shy away from making its intentions with Israel clear has claimed that Israel will not exist in 25 year.

In addition, any association with Israel will get a country in trouble with the IRGC. Hossein Salami, the IRGC’s commander-in-chief, sees the new Arab-Israeli alliance as a direct threat to the IRGC's security, since it aims to create a new regional order. It would also, for the first time, give Israel a foothold in the Persian Gulf. Salami asked the GCC nations to reconsider their alliance and warned them that cooperation with Israel would lead to harsh consequences. He reiterated the IRGC forces’ combat readiness in various strategic positions in the Persian Gulf. 

IRGC-linked media outlets, such as Tasnim and Fars, have pushed a similar narrative. Some have added that the Israeli-Arab NATO-style regional alliance is a continuation of former President Donald Trump's Iran policy. Hossein Dalirian, a former editor of Fars turned social media influencer, has repeatedly supported Iran-backed Houthi attacks in Saudi Arabia and Yemen and even mocked the IDF’s inability to prevent the killing of five Israeli civilians in a recent terror attack.

As for Iranian academics’ perspectives, Islamic Azad University professor Mehdi Motaharnia expressed that the formation of the Arab-Israeli coalition against Iran is a response to the recent attacks carried out by Iran's proxies in Saudi Arabia and the UAE.

In addition, he says that the prospect of the Biden administration withdrawing the IRGC from the list of foreign terrorist groups has given impetus to the creation of an Arab-Israeli NATO. Mehdi writes, "Israel is trying to redefine the security, military, political, diplomatic, economic, commercial, and even social" structure of the region to coexist with the Arab world and confront Iran.

Even though the Arab-Israeli alliance is an existential threat to the Iranian regime, it is unlikely that the regime will abandon its foundational ideologies, as doing so would delegitimize its cause. 

Moreover, Khamenei and the IRGC's expansionist agenda overshadows other perspectives within Iran, including that of the Ministry of Foreign Affairs. In 2019, then-Iranian President Hassan Rouhani unveiled a plan to bring security, peace, stability, and progress in the Persian Gulf, calling it the Coalition for Hope. It was the last attempt at uniting Iran and the GCC states. Unfortunately, the coalition failed to gain traction among the GCC states, as distrust between the two sides runs deep. Since then, the Islamic Republic has done little to restore trust and has instead doubled down on its antagonistic policies.

Khamenei and Salami's tone suggests that Iran's future foreign policy will be more of the same. If Khamenei, the IRGC, and their associated militias continue to undermine their own Foreign Ministry’s efforts to improve relations with neighboring nations, Iran will remain isolated and surrounded by enemies. Ironically, Iran’s strong-man foreign policy will fuel the alliance between the regional rivals that most threatens its security. Iran’s incendiary rhetoric and violent interference have forced a marriage of convenience between Israel and Arab nations that likely otherwise would not come together.

 

 

Beware it is United States and allies fighting war against Russia

According to the western media, the United States has played a quiet but crucial role as Ukrainian troops have made stunning gains this week in a counteroffensive that dealt an embarrassing blow to Russian forces. 

Kyiv’s military strategy, which has allowed it to take back thousands of kilometers worth of Russian-occupied territory within days, is the culmination of months’ worth of planning helped by US war modeling and expertise.  

In addition, artillery and heavy weapons provided by the US have provided immediate firepower and long-term confidence that Ukraine’s troops will remain equipped for the longer fight. 

“What you’re seeing now is real unity in action,” a senior defense official told The Hill, adding that Ukraine’s current successes are the result of “incredible resolve from our allies, partners, and from the Ukrainian people, really, at every level.” 

As of Thursday, Ukrainian troops had taken back nearly the entire Kharkiv province in the northeast and continued to liberate several villages in the southern Kherson region, according to officials in the country. 

The gains are part of a two-front counteroffensive that began at the start of September and made major headway in the past week — particularly in Kharkiv, where Ukrainian troops’ lightning-fast advance seemed to catch Russians forces on the back foot and forced them to rapidly retreat. 

President Volodymyr Zelensky said earlier this week that Ukrainian forces had retaken 6,000 square kilometers (2317 square miles) of Russian-held territory since the beginning of the month — about 3,400 kilometers (2113 miles) of that in the north just in the last week.   

The rapid territory gains — more than the Russians have made in the past five months — even took Ukrainian and Western officials by surprise. 

But the counteroffensive was the result of months of discussions, war strategizing and intelligence sharing between senior US and Ukrainian officials, as well as a steady buildup of Ukrainian firepower with the help of US weapons shipments, according to defense officials and experts.  

Zelensky in midsummer relayed to his top military brass that he wanted to make a major push to show that Ukraine could kick back at the Russian incursion, and had his generals create a plan for a broad offensive across the south and east, CNN first reported. 

The strategy, which was then shared with US defense officials, was assessed to likely fail, and the Ukrainians went back to the drawing board, according to The New York Times. 

The senior defense official confirmed that “over the summer,” the Pentagon “provided advice during the war games, and then the Ukrainians internalized that and made their own decisions.” 

Through “regular dialogue” with their Ukrainian counterparts, US officials were able to “understand evolving requirements” and “synchronize with allies, partners, and Ukraine around the clock” to provide needed weapons and intelligence to help the Ukrainian forces, the official said.    

And top Pentagon spokesperson Brig. Gen. Pat Ryder on Tuesday acknowledged that Washington has been sharing “time sensitive information” with Kyiv, but declined to provide specifics.  

The strategy ultimately deployed by Kyiv proved to amplify existing problems on the Russian side, including supply line and logistics issues, as well as a battered command and control that has hampered Russian troops in the six months since the war began.  

In droves, Russian forces fled from their positions, leaving behind ammunition stockpiles and equipment and, in some cases, falling back into their country across the northeastern border with Ukraine.  

“The biggest explanation you can give for why Ukraine is so successful is that they took the time, they were patient and they shaped the battlespace,” said Steven Horrell, a senior fellow at the Center for European Policy Analysis and a former US naval intelligence officer. “They were very well prepared for this.” 

The carefully planned operations were then bolstered by US weapons, including precision armaments such as the High Mobility Artillery Rocket System, which allows the Ukrainians to precisely strike and take out high-value Kremlin targets, Horrell said.  

As of this week, the US has committed nearly US$15 billion in lethal aid to Ukraine since the start of the Feb. 24 invasion, including a new $675 million package of weapons and equipment for Kyiv announced last week.  

Since April, the US government has also led a 50-country effort known as the Ukraine Contact Group to coordinate the flow of military assistance to Kyiv.  

“Definitely the Western assistance of equipment, training on that equipment, but also intelligence sharing, contributed to the current Ukrainian successes,” Horrell said. 

Despite Ukraine’s recent successes — with country officials calling it one of the major turning points of the war — others have warned the fight is still far from over.  

United Nations Secretary-General António Guterres said Wednesday he thinks a peace deal to end the conflict isn’t likely anytime soon. 

“We are far away from the end of the war,” he told reporters following a call Wednesday with Russian President Vladimir Putin, as reported by CNN. 

“A cease-fire is not in sight,” he added, “I would be lying if I said it would happen.” 

And Biden administration officials have been hesitant to label the quick Ukrainian territorial gains as a turning point in the war. 

US defense officials point out that the Russians still have large amounts of manpower and weapons in Ukraine and still hold important territory, including key cities and towns in the easternmost Luhansk region. 

Still unknown is whether Ukraine can keep the momentum and make headway into Luhansk, where Russian forces will try to hold the line.  

But Western governments say they are prepared for the long haul. 

“Russia’s efforts have not succeeded and will not succeed; and as we have made clear, we are committed to sustained assistance and support as Ukraine defends its sovereignty and territorial integrity,” the defense official said.

 

China plans sanctions on CEOs of Boeing Defense and Raytheon over Taiwan sales

China will impose sanctions on the Chief Executives of Boeing Defense and Raytheon over their involvement in Washington's latest arms sales to Taiwan, a Chinese Foreign Ministry spokesperson said on Friday, reports Reuters.

The sanctions on Boeing Defense, Space, and Security CEO Ted Colbert and Raytheon Technologies Corp boss Gregory Hayes are in response to the US State Department approval on September 02 of the sale of military equipment to Taiwan.

Those sales include 60 anti-ship missiles and 100 air-to-air missiles, of which the respective principal contractors are Boeing Defense, a division of Boeing Co. and Raytheon.

Colbert and Hayes will be sanctioned "in order to protect China's sovereignty and security interests" said foreign ministry spokesperson Mao Ning citing "their involvement in these arms sales."

Mao did not elaborate on what the sanctions would entail or on how they would be enforced. Neither company sells defense products to China, but both have robust commercial aviation businesses.

US defense procurement rules generally prohibit Chinese-origin content, so sanctions have had no impact on the US military.

"The Chinese side once again urges the US government and relevant entities to... stop selling arms to Taiwan and US-Taiwan military contacts."

The Pentagon announced the package in the wake of China's aggressive military drills around Taiwan following a visit last month by US House of Representatives Speaker Nancy Pelosi, the highest-ranking US official to travel to Taipei in years.

China has previously sanctioned Raytheon, Boeing Defense, and unspecified individuals involved in arms sales to Taiwan.

A Raytheon spokesman declined to comment. Boeing declined to comment immediately, but on Thursday said it plans to remarket some airplanes that it had earmarked for Chinese airlines as geopolitical tensions have delayed deliveries.

In December 2021, China approved the return of Boeing's 737 MAX to service after it had been grounded following two accidents involving the airliner that killed 346 people.

Despite the approval, Chinese airlines have not resumed flying the MAX and have not accepted deliveries of new MAX aircraft.

The US government has previously accused the Chinese government of blocking tens of billions of dollars of MAX deliveries to China.

Before the MAX was grounded, Boeing was selling a quarter of the planes it built annually to Chinese buyers, its largest customers.

Raytheon sells to China through its United Technologies engine business.

Friday's announcement marks the first time Beijing identified and imposed sanctions against individuals from these companies.

Beijing considers the self-ruled island of Taiwan a wayward province it has vowed to bring under control, by force if necessary.

Taiwan rejects China's sovereignty claims, saying only its people can decide their future, and vows to defend itself if attacked.