Pentagon calls out Chinese companies it says are helping Beijing’s military

Pentagon calls out Chinese companies it says are helping Beijing's military
© Reuters. FILE PHOTO: The flags of the United States and China fly from a lamppost in the Chinatown neighborhood of Boston, Massachusetts, U.S., November 1, 2021. REUTERS/Brian Snyder//File Photo

By Idrees Ali and Alexandra Alper

WASHINGTON (Reuters) -The United States on Wednesday added more than a dozen Chinese companies to a list created by the Defense Department to highlight firms it says are allegedly working with Beijing’s military, as part of the broader effort to keep American technology from aiding China.

New additions to the list, first reported by Reuters, were posted to the Department of Defense website and include memory chip maker YMTC, artificial intelligence company Megvii, lidar maker Hesai Technology and tech company NetPosa.

Amid strained ties between the world’s two biggest economies, the updated list is one of numerous actions Washington has taken in recent years to highlight and restrict Chinese companies that is says may strengthen Beijing’s military.

While being placed on the list doesn’t involve immediate bans, it carries significant reputational risk for the designated companies and represents a stark warning to U.S. entities and companies about the risks of conducting business with them. It could also add pressure on the Treasury Department to sanction the companies.

In addition, the 2024 National Defense Authorization Act added some teeth to the “Section 1260H” list, prohibiting the Defense Department under Section 805 of the law in coming years from contracting with any of the designated companies.

The updated list was expected to be made public on Wednesday afternoon, a U.S. official said.

YMTC, Megvii and Hesai did not immediately respond to requests for comment. The Chinese embassy in Washington did not immediately respond to a request for comment.

“The Defense Department’s updated 1260H list underscores China’s unwavering commitment to its military-civil fusion strategy,” said Craig Singleton, a senior fellow at the non-partisan Foundation for Defense of Democracies.

“Being listed on 1260H poses major reputational risks to Chinese companies,” he added, noting that some Chinese firms have tried to be removed from the list.

Other firms added on Wednesday include China Three Gorges Corp, China Construction Technology Co and Yitu Network Technology.

They join aviation company AVIC, BGI Genomics Co, China Mobile (NYSE:), energy company CNOOC (NYSE:) and China Railway Construction Corp.

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