*

China sanctions Robert Tsao and Puma Shen for

pro-independence

activities

*

China conducted military drills around Taiwan as a warning

against separatism

*

Tsao and Shen barred from China, Hong Kong, Macau;

businesses

linked to them restricted

(Updates Oct 14 story with Facebook post by Tsao, paragraphs

14, 15; comment from UMC, paragraph 16; adds bullet points)

By James Pomfret and Ben Blanchard

Oct 14 (Reuters) - China said on Monday it would punish

and sanction Taiwanese businessman Robert Tsao and lawmaker Puma

Shen for alleged criminal and pro-Taiwan independence

activities.

In a statement, the Taiwan Affairs Office said the "Black

Bear Academy" that both men were associated with was seeking to

incite separatism that would endanger cross-strait ties.

Tsao is one of Taiwan's richest men who pledged two years

ago to provide millions to two civilian defence training

programmes, including the Black Bear Academy. Shen, a lawmaker

with the ruling Democratic Progressive Party (DPP), helps run

Black Bear Academy training.

The State Council-level Taiwan Affairs Office said it would

include Tsao and Shen on a list of "Taiwan independence"

diehards and impose sanctions on them and the academy.

The move comes as China on Monday launched fresh military

drills around the democratically governed island that China

claims as its own. Beijing said the drills were a warning

against "separatist acts of Taiwan independence forces" while

denouncing Taiwan leader Lai Ching-te of the DPP.

"This is one of China's many acts of intimidation against

Taiwan, including economic coercion, military threats...," a DPP

spokesperson said in a statement to Reuters.

"These irrational acts will only further hurt the feelings

of the Taiwanese people and damage cross-strait relations."

Tsao and Shen would be barred from travelling to China, Hong

Kong and Macau, the statement added, while all affiliated

enterprises and businesses linked to the pair would not be

allowed to "seek profit" in China.

"The Black Bear Academy with the support of the DPP

authorities and external interference forces, has brazenly

cultivated violent Taiwan independence elements and openly

engaged in "Taiwan independence" separatist activities under the

guise of lectures, training, outdoor drills," the statement

read, citing spokesman Chen Binhua.

Shen, speaking to reporters, described this as a provocation

from China, rather than the other way round, and said it

reflected Beijing's great sensitivity towards any civilian

defence initiatives in Taiwan.

"They will definitely use the threat of (economic) sanctions

to conduct further grey zone warfare against Taiwan," he said.

The Black Bear Academy, also known as the Kuma Academy, said

in a statement the moves are "nothing more than politically

motivated attempts to undermine our mission and silence those

who support Taiwan's right to self-determination and democratic

values."

Tsao is the founder and former chairman of chip maker United

Microelectronics Corp ( UMC ), and has said he hoped his

programmes would help train millions of "civilian warriors"

through a mix of survival, military and counter surveillance and

technology courses.

Tsao, in a lengthy Facebook post on Monday, denounced

China's Communist Party, saying the country was on the verge of

economic collapse and is being "besieged" by the United States,

Europe and Japan.

"They understand that using force against Taiwan will lead

to consequences they can hardly bear," he added.

UMC declined comment, saying that Tsao had retired a decade

ago and no longer had any connection with the company.