More than two decades after a law was passed requiring it to do so, the Defense Department released a list of companies operating in the United States that the Pentagon believes are tied to the People’s Liberation Army, the armed forces of the Chinese Communist Party.
The list of 20 Chinese companies, including Huawei and Hikvision, was made public last week, and the designation by the Pentagon under the 1999 National Defense Authorization Act gives President Trump the power to invoke emergency economic powers granted to him under the International Emergency Economic Powers Act of 1977, including sanctions, against the Chinese military-linked companies.
The Pentagon was required to create the list two decades ago, but last week marked the first time that it did so. The 1999 law, passed in part to make sure that China’s admission to the World Trade Organization did not give Chinese companies working for the PLA free rein in using access to the U.S. to build up China’s military strength, required the defense secretary to “make a determination of those persons operating directly or indirectly in the United States or any of its territories and possessions that are Communist Chinese military companies” and to “publish a list of those persons in the Federal Register.” The Pentagon must also “make additions or deletions to the list … on an ongoing basis based on the latest information available.”
The IEEPA empowers Trump to employ a host of powerful financial tools “to deal with an unusual and extraordinary threat” to U.S. national security, including Treasury Department sanctions against the Chinese companies, although it is not known whether the president will invoke this power.
Republican Sen. Marco Rubio of Florida, the chairman of the Senate Intelligence Committee, told the Washington Examiner that “the list put out … by the Pentagon is a start but woefully inadequate to warn the American people about the state-owned and state-directed companies that support the Chinese government and Communist Party’s activities threatening U.S. economic and national security.” The Florida Republican argued that “the list only touches the surface of the Chinese government’s exploitation of U.S. capital markets” and “it’s critical that American institutional and retail investors know which companies are involved not only with the Chinese Communist Party’s military but also with its espionage, human rights abuses, ‘Military-Civil Fusion Strategy,’ and ‘Made in China 2025’ industrial policy.”
Jonathan Hoffman, the assistant to the secretary of defense for public affairs, hinted to the Washington Examiner that this was just the beginning. He called it an “initial list” of “Communist Chinese military companies operating directly or indirectly in the United States,” which generally means “entities owned by, controlled by, or affiliated with China’s government, military, or defense industry.”
“As the People’s Republic of China attempts to blur the lines between civil and military sectors, ‘knowing your supplier’ is critical,” the Pentagon officials said, adding, “We envision this list will be a useful tool for the U.S. Government, companies, investors, academic institutions, and likeminded partners to conduct due diligence with regard to partnerships with these entities, particularly as the list grows.”
The Washington Examiner reached out to most of the companies on the list, and none returned a request for comment.
“Not only is Hikvision not a ‘Chinese military company,’ Hikvision has never participated in any R&D work for military applications,” a Hikvision spokesperson told Axios. “Hikvision has always tried to fully and transparently cooperate with the U.S. government to answer questions and correct misunderstandings about the company. Hikvision will continue to try to work with the US government to resolve all of these matters.”
Hikvision, a global surveillance equipment manufacturer, was one of 28 Chinese security bureaus and technology companies blacklisted by the Commerce Department in October for what the U.S. government said was their role in the Chinese government’s oppression of Uighur Muslims.
The Permanent Subcommittee on Investigations, led by Republican Sen. Rob Portman of Ohio, released a report in June detailing how the federal government provided “little-to-no oversight” of Chinese state-owned telecoms for two decades and how China is illicitly targeting U.S. communications the same way it has targeted education, research, and personal data. That subcommittee previously released reports on China’s foreign funding on U.S. campuses, theft of U.S. research, and cyberattacks against U.S. companies.
Sen. Tom Cotton, a member of the Armed Services Committee, told Fox Business anchor Maria Bartiromo on Fox News on Sunday that there had been a “longstanding bureaucratic and establishment indifference to the threat that China poses” and the Pentagon “finally” produced this list after he and other senators brought it to the Defense Department’s attention. The Arkansas Republican called the Chinese military’s use of companies in the U.S. “an example of what China calls civil-military fusion, where they use cutting edge civilian companies as fronts to increase their military technology, even in competitive countries like the United States.” Cotton said “that needs to stop today” as he called for Trump to use his new powers to sanction the PLA-tied companies.
Chinese telecom giant Huawei also did not respond to the Washington Examiner’s request for comment about being placed on the Pentagon list.
“The tide is turning against Huawei as citizens around the world are waking up to the danger of the Chinese Communist Party’s surveillance state,” Secretary of State Mike Pompeo said last week, adding, “Huawei’s deals with telecommunications operators around the world are evaporating” because, “the more countries, companies, and citizens ask whom they should trust with their most sensitive data, the more obvious the answer becomes: not the Chinese Communist Party’s surveillance state.”
The U.S. has engaged in an all-out effort to limit Huawei’s global reach, especially in the area of fifth-generation wireless, or 5G, pushing its “Five Eyes” partners to reject Huawei technology in their communications networks. Canada is currently reconsidering its business dealings with Huawei, though it is under extreme pressure by the Chinese Communist Party. The U.S. views Huawei technology as a national security threat.
The Justice Department unveiled a superseding indictment against Huawei in February, charging the Chinese telecommunications giant with racketeering and conspiracy to steal trade secrets, including Racketeer Influenced and Corrupt Organizations violations and violations of U.S. sanctions against Iran and North Korea.
