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The logo of Chinese company Huawei. Photo: Daniel Leal-Olivas/AFP/Getty Images

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.
The list of Chinese companies that the Department of Defense says are linked to the People's Liberation Army.

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.

Go deeper

Sep 30, 2020 - World

House report: U.S. intelligence agencies have failed to adapt to China threat

Xi Jinping and other Chinese politicians and delegates listen to the national anthem duirng the closing of the 19th Communist Party Congress in 2017. Photo: Lintao Zhang/Getty Images

The House Intelligence Committee on Wednesday released a report finding that the U.S. intelligence community has failed to adapt to the growing threat from China, arguing that it will struggle to compete on the global stage for decades to come if it does not implement major changes.

The big picture: The 200-page report, based on thousands of analytic assessments and hundreds of hours of interviews with intelligence officers, determined that the intelligence community's focus on counterterrorism after 9/11 allowed China "to transform itself into a nation potentially capable of supplanting the United States as the leading power in the world."

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Illustration: Annelise Capossela/Axios

Although net prices of brand-name drugs have increased significantly over the last decade, the savings produced by generics have actually driven average prescription prices down in Medicare's pharmacy benefit and Medicaid, according to a new analysis by the Congressional Budget Office.

Why it matters: The analysis reiterates that the generic market is largely working as intended.

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