Frozen properties, ban on doing business and attempted boycott. This is how China reacts to the gigantic agreement to supply arms to Taiwan. But the markets are immune, with shares rising by up to 125% from January to today.
The day of Saint Stephen Beijing imposed sanctions on twenty US companies in the defense sector and a dozen executives, just a week after Washington announced the sale of large-scale weapons in Taiwan. According to the Chinese Foreign Ministrythe sanctions involve freezing the assets of companies in China and banning sanctioned individuals and organizations from interacting with them. The decision however is largely symbolicas US defense contractors have very few business relationships with the People’s Republic. Among the companies that ended up on the list are Northrop Grumman Systems Corporation, L3Harris Maritime Services And Boeing.
Palmer Luckey and the Anduril case
Among the sanctioned executives is the founder of Anduril Industries (today among the most popular for the production of combat drones), or the super-technician Palmer Luckey. He can no longer do business in China and has been barred from entering the country. All this shortly after the announcement of the sale of arms to the United States to Taiwan for a value of over ten billion dollarsan action which, however, still needs to be approved by the American Congress. And if US politics decides to go ahead, it would be the largest weapons package never delivered by the United States to the autonomous territory.
Beijing’s “red line”.
“We emphasize once again that the question of Taiwan is at the center of the fundamental interests of China and represents the first red line not to be exceeded in China-US relations,” the Chinese Foreign Ministry said in a statement on Friday, also specifying that “any company or individual selling weapons to Taiwan will pay the price.” The Ministry also urged the United States to put an end to what it called “the dangerous moves to arm Taiwan”.
Military pressure and US obligations
Beijing continues to assert that US arms sales to Taiwan violates diplomatic agreements between China and the United States, and for this reason in recent years theChinese army has increased its presence in the skies and waters around the former Curvycarrying out joint exercises with warships and fighter planes now flying over the strait between the island and the continent almost every day. However, according to the American federal lawthe United States is obligated to assist Taiwan in its self-defensea point that has obviously become increasingly contentious with China. Beijing already has tense relations with Washington over issues commercial, technological and relating to human rightstherefore this worsening of relationships certainly does not make relationships easier.
The companies affected and the stock market rally
The companies involved also include several major US defense contractors such as the subsidiary of Leidos Gibbs & Cox and the company specialized in aerospace logistics Vse Corporation. China has also sanctioned several smaller, more technologically advanced companies, such as the drone manufacturer Red Cat Holdings. Luckey, founder of Anduril, said his company is acting on the belief that China may move forward with plans to invade Taiwan, to act in the 2027 and this belief has led Anduril to speed up times so that the weapons systems it is developing will be ready, delivered and operational by 2027.
Defense, Silicon Valley and new strategies
Interviewed by the defense press, Luckey added: “My hypothesis may not materialize, but imagine how stupid I would feel if I spent hundreds of millions of dollars to build a new weapons system that I already know will not enter service before 2030that is, after this invasion presumably occurs, at least according to most experts.” His Anduril is a relatively new company in the Defense sector: the sector has the reputation of beingcapital-intensive” and to rely heavily on the government contacts necessary to win federal contracts. These two factors make it a difficult industry to penetrate. Even if theUS Army is starting to change the process of applying for federal contracts since in second term of President Donald TrumpThe Pentagon demonstrates that he has closer ties with Silicon Valley defense startupas well as with major military contractors.
Strong growth stocks
Certainly, however shares of defense companies have increased a lot in 2025 following Trump’s return to the White House and theescalation of geopolitical tensions. And among the companies included in the Chinese sanctions list are Northrop Grummanraised in 25% in 2025, Leidos of 30%, L3 Harris of 40% And Vse rise of almost the 90%. In 2025 General Electric Aerospace and the great shipbuilder Huntington Ingalls they both grew by just under 90%. Meanwhile, the German arms manufacturer Rheinmetall grew up of 184% and the Elbitan Israeli company specializing in drones, achieved increases of 125%. Movements that have made the happiness of shareholders.
