US names 20 China firms said to be controlled by PLA

WASHINGTON • The Trump administration has determined that top Chinese firms, including telecoms equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military, laying the groundwork for new US financial sanctions, according to a document seen by Reuters on Wednesday.

A US defence official, speaking on condition of anonymity, confirmed the document's authenticity and said it had been sent to Congress.

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

The list of 20 companies that Washington alleges are backed by the People's Liberation Army (PLA) also includes China Mobile Communications Group and China Telecommunications Corporation, as well as aircraft manufacturer Aviation Industry Corp of China (AVIC). The designations were drawn up by the Defence Department, which was mandated by a 1999 law to compile a list of firms "owned or controlled" by the PLA that provide commercial services, manufacture, produce or export.

The Pentagon's designations do not trigger penalties, but the law says the president may impose sanctions that could include blocking all property of the listed parties.

The Pentagon has come under pressure from lawmakers of both US political parties to publish the list, amid rising tensions between Washington and Beijing over technology, trade and foreign policy.

Last September, top US Senate Democrat Chuck Schumer and Republican Senator Tom Cotton penned a letter to Defence Secretary Mark Esper raising concerns about Beijing's enlisting of Chinese corporations to harness emerging civilian technologies for military purposes.

"Will you commit to updating and publicly releasing this list as soon as possible?" they wrote.

The list will likely add to tensions between the world's two largest economies, which have been at loggerheads over the handling of the coronavirus pandemic and China's move to impose security legislation on Hong Kong, among multiple points of friction that have worsened this year.

Last week, China threatened retaliation after US President Donald Trump signed legislation calling for sanctions over the repression of China's Uighurs.

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 US economic and national security", Republican Senator Marco Rubio, who sponsored the Uighur Bill, said in a statement.

The list will also turn a spotlight on American companies' ties to the Chinese firms as well as their operations in the United States.

In 2012, US-based General Electric set up a 50/50 avionics joint venture with AVIC, known as Aviage Systems, to supply equipment for China's C919 passenger jet.

The Defence Department list also includes China Railway Construction Corporation, China Aerospace Science and Industry Corporation, as well as CRRC, the world's largest maker of passenger trains which has clinched contracts in Boston, Philadelphia, Chicago and Los Angeles by underbidding rivals.

The companies did not immediately respond to requests for comment.

Many of the companies listed are already in the crosshairs of US regulators. Both Huawei and Hikvision were added to a Commerce Department blacklist last year, which forces their US suppliers to seek licences before selling to them.

In April, the Justice Department and other federal agencies called on the Federal Communications Commission to revoke China Telecom (Americas) Corporation's authorisation to provide international telecommunications services to and from the US. The telecoms regulator rejected a similar request by China Mobile last year that had been pending for years.

REUTERS