Indo-Pacific News - Geo-Politics & Defense

Pentagon Reveals 134 'Chinese Military Companies' Operating in US The Defense Department has released a list of Chinese companies operating in the U.S which it believes are working to advance Beijing's military-strategic aims. The Pentagon revealed on Tuesday that 134 "Chinese military companies"—57 firms and 77 subsidiaries—were operating "directly or indirectly in the United States." The updated list marks a sharp increase from the 73 firms reported last January, and features firms in aerospace, chemical engineering and information technology. It includes smartphone maker Huawei Technologies, battery maker CATL and video game firm Tencent Holdings, China's largest company by market capitalization. Both Tencent and CATL have deemed the Defense Department's designation a "mistake," and threatened legal action. Huawei has been contacted for comment. Newsweek contacted the Department of Defense outside of business hours for comment on the list, the definition of "military company," and what measures will be taken, if any, against the companies. Why It Matters Defence officials said the expanded list serves to help the U.S. counter Beijing's Military-Civil Fusion strategy (MCF), described by the State Department as an "aggressive national strategy" using technological advances to "develop the People's Liberation Army (PLA) into a 'world class military' by 2049." What To Know China's MCF strategy involves seemingly civilian enterprises undertaking research and development of military capabilities, and that "joint research institutions, academia, and private firms are all being exploited to build the PLA's future military systems—often without their knowledge or consent," according to the Defense Department. "Under MCF, the CCP is acquiring the intellectual property, key research, and technological advances of the world's citizens, researchers, scholars, and private industry in order to advance the CCP's military aims," the department said in a 2017 fact sheet. "First mentioned in Chinese government documents as far back as 2007, this is basically a strategy to leverage any available research and development for the modernization of the People's Liberation Army," Jakob Hensing, research fellow at the Global Public Policy Institute, told Newsweek, "for example through actively orchestrated collaborations and resource sharing with firms and institutions otherwise not primarily focused on military matters." The Defense Department has since 2021 publicly reported on the number of Chinese military companies operating in the U.S. "By including them in the list, the US administration is signaling that it is convinced that these companies, mainly through their R&D, are contributing to China's military modernization in such an immediate way that they should ultimately be considered military companies," according to Hensing. What People Are Saying Liu Pengyu, a spokesperson for the Chinese embassy in Washington, told the BBC: "The US's practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States." Jakob Hensing, research fellow at the Global Public Policy Institute, told Newsweek: "This number [of companies] mainly demonstrates the breadth of technology areas – from AI and communications to batteries or biotech – that are deemed militarily relevant nowadays, and the pervasiveness of China's efforts to leverage companies' activities for its military modernization agenda. The list includes firms in a wide range of industries whose immediate business activities in the US may often seem innocuous and quite remote from any military applications, but the foundational character of their core technologies still makes them interesting to the PLA." A spokesperson for battery-maker CATL told Newsweek: "CATL has never engaged in any military-related business or activities, so this designation by the Department of Defense is a mistake. It does not restrict CATL from conducting business with entities other than DoD and is expected to have no substantially adverse impact on our business. We will proactively engage with DoD to address the false designation, including legal action if necessary, to protect the interests of our company and shareholders as a whole." Video game firm Tencent said in a statement: "As the Company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake. Unlike other lists maintained by the U.S. Government for sanctions or export control measures, inclusion in the CMC List relates only to U.S. defense procurement, which does not affect the business of the Group...The Company intends to initiate a Reconsideration Process to correct this mistake. During the process, it will engage in discussions with the U.S. Department of Defense to resolve any misunderstanding, and if necessary, will undertake legal proceedings to remove the Company from the CMC List. The Company will make further announcement(s) as and when appropriate." What Happens Next? While inclusion on the list does not imply sanctions will be placed on the entities designated as Chinese military companies, the National Defense Authorization Act of 2024 prohibits the Pentagon from collaborating with these firms from June 2026.