Trump administration says Huawei and Hikvision are backed by the Chinese military

Flags with the Huawei logo.

FRED DUFOUR | AFP via Getty Images

The Trump administration has determined that major Chinese companies, including telecommunications equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military, laying the groundwork for new U.S. financial sanctions.

Washington placed Huawei and Hikvision on a commercial blacklist last year over national security concerns and has led an international campaign to convince allies to exclude Huawei from their 5G networks.

Reuters first reported a Department of Defense (DOD) document listing 20 companies operating in the United States that Washington alleges are backed by the Chinese military.

The DOD document also includes China Mobile Communications Group and China Telecommunications Corp as well as aircraft manufacturer Aviation Industry Corp of China.

The designations were drawn up by the Department of Defense, which was mandated by a 1999 law to compile a list of Chinese military companies operating in the United States, including those “owned or controlled” by the People’s Liberation Army that provide commercial services, manufacture, produce or export.

The Pentagon’s appointments do not trigger sanctions, but the law says the president can impose sanctions that could include blocking all assets of the listed parties.

Huawei, China Mobile, China Telecom, AVIC and the Chinese Embassy in Washington did not respond to requests for comment.

Hikvision called the allegations “unfounded,” noting that this was not a “Chinese military company,” and that it had never participated in any R&D work for military applications, but would work with the United States government to resolve the case.

The Pentagon has been pressured by lawmakers from both political parties in the United States to publish the list, amid mounting tensions between Washington and Beijing over technology, trade, and foreign policy.

Last September, the top Democrat in the US Senate. The US, Chuck Schumer, Republican Senator Tom Cotton, and Republican Representative Mike Gallagher wrote a letter to Defense Secretary Mark Esper, expressing concern over Beijing’s enlistment of Chinese corporations to take advantage of emerging civilian technologies for military purposes.

“Will you commit to updating and publicly publishing this list as soon as possible?” they asked in the letter.

On Wednesday, Cotton and Gallagher praised the Defense Department for publishing the list and urged the president to impose economic sanctions against the companies.

The White House did not comment on whether it would sanction the companies on the list, but a senior administration official said the list can be viewed as “a useful tool for the US government, companies, investors, academic institutions and like-minded partners perform due diligence regarding partnerships with these entities, particularly as the list grows. “

The list is likely to add to tensions between the world’s two largest economies, which have disagreed over the handling of the coronavirus pandemic and China’s move to impose security legislation in Hong Kong, between multiple points of friction. that have gotten worse this year.

Last week, China threatened retaliation after President Donald Trump signed legislation demanding sanctions for the crackdown on China’s Uighurs.

The list “is a start, but woefully inadequate to warn the American people of state-run and targeted companies that support the activities of the Chinese government and the Communist Party that threaten the economic and national security of the United States,” said Republican Senator Marco Rubio, who sponsored the Uighurs. bill, he said in a statement.

Focus on US Ties USA

The list will also highlight American companies’ ties to Chinese companies, as well as their operations in the United States.

In 2012, General Electric, based in the United States, established a 50/50 avionics joint venture with AVIC known as Aviage Systems, to supply equipment for China’s C919 passenger jet.

The Department of Defense list also includes China Railway Construction Corp, China Aerospace Science and Industry Corp (CASIC), as well as CRRC, the world’s largest manufacturer of passenger trains, which has closed contracts in Boston, Philadelphia, Chicago and Los Angeles. by weakening its rivals. .

The companies did not immediately respond to requests for comment.

Many of the companies listed are already in the sights of US regulators.

Huawei and Hikvision’s blacklist has forced some of their U.S. suppliers to search for licenses before selling to them.

In April, the US Department of Justice. USA And other federal agencies have asked the Federal Communications Commission to revoke the authorization of China Telecom (Americas) Corp to provide international telecommunications services to and from the United States. The telecoms regulator rejected a similar request from China Mobile last year that had been pending for years.