More China-based Companies added to the U.S. Defense Blacklist
January 14 2021, the Department of Defense released the names of additional “Communist Chinese military companies” operating directly or indirectly in the United States in accordance with the statutory requirement of Section 1237 of the National Defense Authorization Act for Fiscal Year 1999, as amended. The Department of Defense is determined to highlight and counter the People’s Republic of China’s (PRC) Military-Civil Fusion development strategy for the People’s Liberation Army (PLA) through, access to advanced technologies and expertise acquired and developed by even those PRC companies, universities, and research programs that appear to be civilian entities.
The most recent additions to the U.S. Defense Blacklist include:
- Advanced Micro-Fabrication Equipment Inc. (AMEC)
- Luokung Technology Corporation (LKCO)
- Xiaomi Corporation
- Beijing Zhongguancun Development Investment Center
- GOWIN Semiconductor Corporation
- Grand China Air Company (GCAC)
- Global Tone Communication Technology (GTCOM)
- China National Aviation Holding Co. Ltd. (CNAH)
- Commercial Aircraft Corporation of China (COMAC)
The total number of blacklisted companies now is 44 companies. The Department of Defense released its initial list of companies to Congress in June of 2020 and continues to update the list with additional entities as appropriate. For the complete list of companies on the U.S. Defense Blacklist click here.
Beijing-based Xiaomi, a Chinese multinational electronics company, was recently added to the list of alleged Chinese military companies by the department of defense January 14, 2021. Xiaomi, which surpassed Apple to become the world’s third-largest smartphone maker in the third quarter of 2020 according to IDC, released an announcement confirming that the company is not owned, controlled, or affiliated with the Chinese militaryand is not a “communist Chinese military company”. It will take appropriate course of action to protect the interests of the company and its stakeholders. As of January 15, 2021, the company’s shares fell 10% in Hong Kong.
Commercial Aircraft Corporation of China (COMAC)
The latest list additions also included the Commercial Aircraft Corporation of China (COMAC), a majorstate-owned Chinese plane maker as potential alternative to Boeing (BA) and Airbus (EADSF).
COMAC is not a publicly traded companyso the investment ban will likely have a limited direct impact but the company has sold bonds domestically. The risk of being added to the U.S. Defense Blacklist however is that it will restrict American companies’ ability to export products to the plane maker.
Restricted export will create large issues for COMAC. The companies C919 engines are made by CFM International which isa joint venture between General Electric and France’s Safran. The ARJ21’s engines come from Connecticut-based Pratt & Whitney. COMAC’s website includes several other U.S. companies as “tier one” suppliers of key component systems including Honeywell, B/E Aerospace, Donaldson, Moog, and Parker Hannifin.
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By Hala Mohamed3