Washington on Wednesday ordered the suspension of all flights by Chinese airlines into and out of the United States after Beijing failed to allow American carriers to resume services to China.
The move adds to a growing friction between the world's two biggest economies amid the coronavirus crisis and in the wake of a two-year trade war that has not been fully resolved.
The US action, which takes effect June 16 but could be implemented sooner if President Donald Trump orders it, applied to seven Chinese civilian carriers, although only four currently are running service to US cities including Air China and China Eastern Airlines, the Department of Transportation (DOT) said.
"US carriers have asked to resume passenger service, beginning June 1st. The Chinese government's failure to approve their requests is a violation of our Air Transport Agreement," the department said in a statement.
US air carriers sharply reduced or suspended service to China amid the COVID-19 pandemic.
United and Delta submitted applications at the beginning of May to resume flights but have been unable to receive authorisation from Civil Aviation Authority of China (CAAC), the DOT said.
The latest spat between Washington and Beijing centers partially on the CAAC deciding to determine its limit on foreign airlines based on their activity as of March 12.
US carriers had by then suspended all flights due to the pandemic -- meaning their cap was calculated to be zero -- while Chinese-flagged flights continued.
The "arbitrary 'baseline' date... effectively precludes US carriers from reinstating scheduled passenger flights to and from China," the US order says.
The department also said there are indications Chinese airlines are using charter flights to get around the limit of one flight a week to increase their advantage over US carriers.
"Our overriding goal is not the perpetuation of this situation, but rather an improved environment wherein the carriers of both parties will be able to exercise fully their bilateral rights," the order said.
In early January 2020, before the pandemic struck, US and Chinese carriers operated approximately 325 weekly flights between the two countries.
Trump has blamed China for the US coronavirus outbreak and blasted the country in a fiery speech last week over a new security law in Hong Kong.
China for its part has mocked the US stance on Hong Kong in light of civil rights protests across the US following the police killing in Minneapolis of George Floyd, an unarmed African-American man.
"Racism against ethnic minorities in the US is a chronic disease of American society," Chinese foreign ministry spokesman Zhao Lijian said earlier this week.
"The current situation reflects once more the severity of the problems of racism and police violence in the US," he told reporters in Beijing.
Meanwhile, American Airlines, which is not planning to resume service to mainland China until late October, saw its debt rating cut Wednesday by S&P Global Ratings due to the reduced demand for air travel.
Airlines have been among the hardest hit by the global pandemic, as air transport been virtually shut down, forcing many to announce massive layoffs.
S&P cut American's debt grade a notch to "B-" saying the cost-savings measures it has taken "will be insufficient to offset the effects of sharply lower demand from the impact of the virus on the company's credit metrics."
American is a beneficiary of the government's Payroll Support Program, under which it will receive $5.8 billion through July 2020, but S&P said the carrier still has a cash shortage.
The fight over air space comes after the US imposed restrictions on Chinese telecom giant Huawei and ordered a probe into the actions of Chinese companies listed on American financial markets.
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