Pentagon lists 20 companies aiding Chinese military

The Pentagon has compiled a list of Chinese companies with ties to China’s military, including two groups listed on the New York Stock Exchange, as part of an intensifying effort by the administration and Congress to make it harder for China to secure US investment and sensitive technologies.

The list, which was obtained by the Financial Times, includes a number of state-owned entities involved in fields ranging from nuclear power to aviation. But it also includes China Telecommunications and China Mobile, two commercial telecommunications companies in China that are both listed in New York.

Congress required the Pentagon to produce the list in 1999, but security officials never followed through.

The FT last year reported that the effort gained momentum as lawmakers responded to rising tension with China by telling the defence department to publicly name companies it believes help China’s military.

A 1999 defence law, which specifies Chinese companies that operate “directly or indirectly” in the US, gives the president authorisation to impose sanctions on any of them.

Congress is not required to act on the list based on the 1999 law. But China hawks say it will boost pressure on US investors to divest from companies that Washington says threaten national security. The compilation of the list comes just weeks after President Donald Trump told the main US government pension fund not to invest in any Chinese-listed companies.

The 20 companies in the Pentagon’s list include Huawei, the Chinese telecoms equipment maker that Washington believes helps Beijing conduct cyber espionage.

It also names Hikvision, a company that supplies surveillance technology to detention camps in the Xinjiang province where the Chinese government has interned more than 1m ethnic Muslim Uighurs for re-education.

Mike Pompeo, US secretary of state, this month said Xi Jinping, Chinese president, had “greenlighted a brutal campaign of repression against Chinese Muslims, a human-rights violation on a scale we haven’t seen since world war two”. But John Bolton, the former US national security adviser, claimed in a new book that Mr Trump had told Mr Xi that he did not object to the internments.

“In addition to other official lists, we now have an opportunity to examine the US capital markets footprints of a Pentagon list of Chinese [People’s Liberation Army]-affiliated enterprises,” said Roger Robinson, a former National Security Council official who advocates for a much tougher stance on China and its companies.

“The complete disconnect between the US security community and Wall Street fund managers and index providers will probably prove unsustainable, especially for the Wall Street folks,” said Mr Robinson, who is president of RWR Advisory Group, a Washington-based consultancy.

A defence official said issuing the list was “an important step in highlighting and countering China’s military-civil fusion strategy, which supports the PLA’s modernisation goals by ensuring its access to advanced technologies acquired and developed by Chinese companies, universities, and research programmes”.

The official said the list would be “a useful tool” for the US 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.

The Pentagon would update the list with additional entities as appropriate, the official said.

Eric Sayers, an Asia security expert and adjunct fellow at the Center for a New American Security, said the list would add to the pressure to respond to China’s “military-civil fusion strategy”, which requires Chinese companies that develop certain technologies to share them with the Chinese military.

The Pentagon action comes as relations between the US and China continue to spiral downwards over a range of economic, security and global health issues.

Mr Trump has over the past few months blasted China over Covid-19, and blamed the Chinese government for its global spread. The president last month also threatened to “cut off the whole relationship” with China, although he did not explain what that would entail.

Follow Demetri Sevastopulo on Twitter: @dimi

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