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Pentagon lists 20 firms controlled by Chinese military

The Pentagon has unveiled a list of Chinese firms it says are owned or controlled by the communist Republic’s military, exposing fresh tensions between the world’s two largest economies.

The 20-strong list includes telecoms giant Huawei, video surveillance firm Hikvision, China Railway Construction, and China General Nuclear Power.

China Telecom and China Mobile, two telecoms companies that are listed in New York, also make the list.

“As the People’s Republic of China attempts to blur the lines between civil and military sectors, ‘knowing your supplier’ is critical,” said Pentagon spokesman Jonathan Hoffman in a statement.

US-China tensions increase

He added: “We envision this list will 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.”

Hikvision called the US move “baseless,” adding its ownership details are publicly available as a listed company and as a “independently operated enterprise.”

Congress first required the Pentagon to produce the list in 1999, but no previous administration has ever released the report.

US President Donald Trump has the authority under the International Emergency Economics Powers Act of 1977 to level financial sanctions against those companies.

However, many observers say Trump will use the list as part of his campaign to pressure allies not to use Chinese firms and cajole US investors not to back companies linked to the communist Republic.

China has worked to a policy known as ‘civil-military integration’ which allows ventures from both sectors to share dual-use technologies. This can allow the Chinese military access to technologies that might otherwise be difficult to obtain under sanctions imposed after the 1989 Tiananmen Square massacre.

Concerns over security

The Pentagon list comes as relations between the US and China continue to worsen over a range of economic, security and global health issues. Trump has hit out at China over coronavirus and blamed Beijing for its global spread. Last month he threatened to “cut off the whole relationship” with Beijing.

“The list put out today by the Pentagon 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 US economic and national security,” said Republican Senator Marco Rubio, who has been a leading voice for taking a tougher stance on China.

One of the major firms on the list is Hikvision, which supplies surveillance cameras to detention camps in the Xinjiang region where the Chinese government has interned more than one million ethnic Muslim Uighurs.

Another is Aviation Industry Corporation of China (AVIC), this state-owned firm provides parts to Airbus and Boeing, as well as making its own civil and military aircraft.

A third is China Mobile Communications Group, which owns China’s biggest mobile phone operator, with more than 940 million subscribers. The Federal Communications Commission rejected a license application from the US arm of Hong Kong-listed China Mobile to operate in the US last year, saying the firm “would raise substantial and serious national security and law enforcement risks.”

Here is the full list: Aviation Industry Corporation of China; China Aerospace Science and Technology Corporation; China Aerospace Science and Industry Corporation; China Electronics Technology Group Corporation; China South Industries Group Corporation; China Shipbuilding Industry Corporation; China State Shipbuilding Corporation; China North Industries Group Corporation; Huawei Technologies Co.; Hangzhou Hikvision Digital Technology Co.; Inspur Group; Aero Engine Corporation of China; China Railway Construction Corporation; CRRC Corp.; Panda Electronics Group; Dawning Information Industry Co.; China Mobile Communications Group; China General Nuclear Power Corp.; China National Nuclear Power Corp.; China Telecommunications Corp.

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    Roger Baird

    Roger Baird is News Editor at Finixio. He has worked as a financial journalist for 20 years reporting on companies, capital markets and the UK economy.

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