A security guard keeps watch as an AI-powered system developed by Chinese tech firm Megvii screens commuters for fevers as they enter a metro station in Beijing. The U.S. Department of Defense added Megvii to a list in February 2024 that calls out Chinese firms that assist Beijing’s military. AFP/GETTY IMAGES
REUTERS
The United States in early February 2024 added more than a dozen Chinese companies to a list created by the U.S. Department of Defense (DOD) to highlight firms it says are working with Beijing’s military as part of a broader effort to keep U.S. technology from aiding the People’s Republic of China (PRC). New editions to the 1260H list were posted on the DOD’s website and included memory chipmaker YMTC, artificial intelligence company Megvii, lidar maker Hesai Technology HSAI.O and technology firm 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 U.S. leaders say may strengthen Beijing’s military. A spokesperson for the Chinese embassy in Washington said the PRC opposed the move and called it an abuse of state power.
Hesai Group said it does not sell products to any military in any country and it does not have ties with any military. The company said it was disappointed to be added to the list. YMTC and Megvii did not immediately respond to requests for comment.
While being placed on the list doesn’t involve immediate bans, it can be a blow to designated companies’ reputations 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 in coming years from contracting with any of the designated companies. “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 Foundation for Defense of Democracies. “Being listed on 1260H poses major reputational risks to Chinese companies,” he added.
Other firms added include China Three Gorges Corp., China Construction Technology Co. and Yitu Network Technology, as well as publicly traded companies Chengdu JOUAV Automation Tech Co., Chengdu M&S Electronics Technology Co., Guizhou Aviation Technical Development Co., and ShenZhen Consys Science & Technology Co. They join previously listed aviation company AVIC, BGI Genomics Co, China Mobile, energy company CNOOC and China Railway Construction Corp.
In a separate action in February, senior U.S. officials, including FBI Director Christopher Wray, warned that hackers linked to China’s government are preparing to cause “real-world harm” by targeting critical U.S. infrastructure, such as water treatment plants, the electric grid, oil and natural gas pipelines and transportation hubs. “China’s hackers are positioning on American infrastructure in preparation to wreak havoc and cause real-world harm to American citizens and communities, if or when China decides the time has come to strike,” Wray told the House Select Committee on the Chinese Communist Party.