Pentagon Lists 20 Chinese Companies as Backed by Chinese Military, Including Huawei

June 25, 2020 Updated: June 26, 2020

Sen. Tom Cotton (R-Ark.) and Rep. Mike Gallagher (R-Wis.) applauded the Pentagon’s decision to issue a list of Chinese companies that are owned or controlled by the Chinese military.

The list of 20 Chinese companies was published on June 24 in response to a request by Sens. Cotton, Gallagher, Chuck Schumer (D-N.Y.), and Ruben Gallego (D-Ariz.), laid out in a letter addressed to Defense Secretary Mark Esper in September 2019.

The companies include telecom giant Huawei, mobile operators China Mobile and China Telecom, rail car manufacturer CRRC, video surveillance manufacturer Hikvision, shipbuilding companies CSIC and CSSC, aerospace firm AVIC, defense company Norinco, and cloud computing and data-center company Inspur.

“This report is one piece of a broader campaign our nation must wage against the Chinese Communist Party and its parasitic technology transfer efforts,” Cotton and Gallagher said in a June 24 statement, and expressed hope that the Pentagon will add more to the list soon.

In the letter, the lawmakers pointed out that under a 1999 law, the Pentagon was mandated to designate any firms “owned or controlled” by China’s People’s Liberation Army (PLA) that are engaged in providing commercial services, manufacturing, production, or exporting.

“We urge the President to impose economic penalties against these Chinese military firms,” Cotton and Gallagher said in the press release.

The White House didn’t comment about whether it would sanction the listed firms.

The list can be “a useful tool for the U.S. Government, companies, investors, academic institutions, and like-minded partners to conduct due diligence with regard to partnerships with these entities, particularly as the list grows,” according to a Reuters report, which cited an unidentified senior administration official.

Military Links

For many on the Pentagon list, their connections to the PLA are well-documented.

Huawei has extensive ties to the Chinese military, as its founder, Ren Zhengfei, was former director of an information engineering department within the PLA. The U.S. government has already banned the company from taking part in the country’s rollout of next-generation 5G mobile networks.

Hikvision, which is 42 percent owned by China’s state-owned China Electronics Technology Corp. (CETC), has provided its artificial-intelligence-enabled video surveillance technology for China’s national defense and security purposes, according to a 2019 congressional testimony.

Hikvision told Reuters that it isn’t a “Chinese military company” and would work with the U.S. government to resolve any concerns.

CETC, CRRC, China Telecoms, and Inspur have publicly supported China’s military-fusion strategy, a state-directed initiative of leveraging cooperation between the military and private industry to advance technological innovation. A Chinese government agency called the Central Commission for the Development of Military-Civil Fusion oversees the effort.

In May, the U.S. State Department issued a statement explaining China’s fusion strategy, which involves “developing and acquiring key technologies through licit and illicit means,” such as directing academic and research collaboration to military gain, forced technology transfer, intelligence gathering, and outright theft.

On May 29, President Donald Trump issued a proclamation that bars Chinese graduate students and researchers who are connected to any entity that implements or supports China’s fusion strategy from seeking F or J visas to enter the United States. F visas are for full-time students and J visas are for cultural or educational exchange programs.

Trump added that the U.S. secretary of state should consider whether Chinese nationals currently on F or J visas should have their visas revoked.

Cotton and Gallagher added that “Congress should update this 1999 law to better address the present-day challenges posed by China’s Military-Civil Fusion strategy,” in their statement.

CRRC won contracts in Boston, Chicago, Los Angeles, and Philadelphia to build subway cars before U.S. lawmakers raised concerns about the deals and introduced bills aimed to prevent federal money from being granted to Chinese companies.

Norinco and AVIC are suppliers to the PLA and major exporters for China’s arms sales. Both companies have previously been slapped with U.S. sanctions for contributing to Iran’s development of missile programs.

The list “is a start, but woefully inadequate to warn the American people about the state-owned and -directed companies that support the Chinese government and Communist Party’s activities threatening U.S. economic and national security,” Sen. Marco Rubio (R-Fla.) said in a statement.

Reuters contributed to this report.

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