THERE ARE FEW surprises if any among the list of 20 companies released by the US Department of Defence that it says have ties to the People’s Liberation Army. It comprises defence contractors such as Aviation Industry Corporation of China (AVIC), telecoms companies such as the much-sanctioned Huawei Technologies and surveillance equipment producers such as Hikvision. More companies are likely to be added in future.
The US Congress first required the Pentagon to produce the list more than two decades ago. It is only with the advent of the Trump administration that the request has been acted on, or possibly that the list has been made public.
The overt reason for it is to detect supply-chain vulnerabilities in US weapons production. Under the International Emergency Economic Powers Act of 1977, the president has the power to level financial and trade sanctions against any company on the list. He can also choose not to do so, as he has so far done with his sanctions powers granted by the Uyghur Human Rights Policy Act of 2020.
More likely, the new list will be used to exclude the named companies from US government procurement tenders. The Pentagon is particularly concerned about advanced semiconductors and integrated circuits since both are critical for weapons systems, and have the obvious consequences if compromised. The same concerns are growing around artificial intelligence and cloud computing, both of which are at the heart of info- and cyberwarfare. Inspur, a big-data and cloud computing group, is on the list, as is Dawning Information Industry Co., known as Sugon, which Washington blacklisted last year for selling supercomputers to the PLA for nuclear weapons research.
Naming and shaming also fit squarely into the president’s efforts to deny Beijing access to US technology to slow its economic and military development. Similar to the Entities List, the new military list will let Washington use existing export control licences to hinder Chinese companies’ ability to buy US tech components. In April, for example, it changed the rules for granting such licences by expanding the definition of a military end-user to include the civilian supply chain, a direct strike at Beijing’s military-civil fusion strategy.