Defense Department produces list of Chinese military-linked companies

The Defense Department is making public for the first time a list of Chinese companies that are operating in the U.S. and are tied to the Chinese military. The list, obtained by Axios, includes Huawei, Hangzhou Hikvision, China Railway Construction Corporation, and China Telecommunications Corporation.

Why it matters: President Trump has the authority to invoke emergency economic powers, including sanctions, against the 20 companies on the list.

Background: The list was required by the 1999 National Defense Authorization Act, but was either not assembled or not made public, until now.

• It was included as part of a provision regarding the president’s ability to apply the International Emergency Economic Powers Act (IEEPA) to Chinese military-linked companies operating within the United States.
• In 1999, Congress wanted to ensure that China’s entry to the World Trade Organization wouldn’t help the country access defense technologies that would improve China’s military capabilities against the U.S. or its allies.

Details: IEEPA is a tremendously powerful tool, often wielded through Department of Treasury sanctions, for cutting off foreign companies and individuals from the U.S. finance system. It is not yet known if the new list is a prelude to Treasury actions.

• “The president can use IEEPA authorities against entities on the list,” says Larry Wortzel, a commissioner of Congress’s U.S.-China Economic and Security Review Commission, who spoke to Axios in his capacity as an individual commissioner.
• “All of them are the ‘usual suspects,’” said a former senior intelligence official who viewed a copy of the list. “Some have ties to [Ministry of State Security] but all also operate as ‘autonomous collectors.’"

White House national security advisor Robert O'Brien was slated to mention the list in his speech today on the challenge that the Chinese Communist Party's global influence poses to the United States.

What they're saying: "Not only is Hikvision not a “Chinese military company,” Hikvision has never participated in any R&D work for military applications," a Hikvision spokesperson told Axios. "Hikvision has always tried to fully and transparently cooperate with the U.S. government to answer questions and correct misunderstandings about the company. Hikvision will continue to try to work with the US government to resolve all of these matters."

The Department of Defense did not provide comment.

What to watch: “It’s a bark, not a bite, if sanctions (to include prohibition from doing business in the U.S.) don’t follow," said the former official.

Editor's note: This story has been updated to include comment from Hikvision.