Alibaba, Baidu, BYD among 188 Chinese firms added to Pentagon's military company list

Baidu, China's leading search engine [AFP]
Baidu, China's leading search engine [AFP]

The Trump administration said Monday that China's sanctions against American defense companies amount to Beijing's own admission that its suppliers cannot be trusted.

A US administration official, responding to a Yonhap News Agency query about the sanctions announced by China's Ministry of Commerce and Ministry of Finance against American companies, said "Beijing's response is ultimately nothing more than an acknowledgment that Chinese suppliers are unreliable."

The official added that "the US Department of Defense's Section 1260H procurement regulation is a measure to secure a safe and reliable supply chain for the US military."

The Section 1260H procurement regulation is a provision of the National Defense Authorization Act that authorizes the Pentagon to compile and maintain a list of Chinese military companies deemed to be supporting the People's Liberation Army.

On June 8, the Pentagon designated 188 companies — including Chinese tech giants Alibaba and Baidu and electric vehicle manufacturer BYD — as "Chinese military companies operating directly or indirectly within the United States" and added them to the list. The designation does not trigger immediate sanctions, but the listed firms are likely to face disadvantages in future government procurement.

China's Ministry of Commerce announced the previous day that it would impose export controls on dual-use items destined for 10 US defense, drone and rare earth companies. The Ministry of Finance separately announced it would bar 46 American defense firms — including Lockheed Martin, General Dynamics, Raytheon and Boeing — from Chinese government procurement.

The moves represent China's counterpunch after the US signaled it would penalize Chinese advanced-industry firms. The US official's remarks asserted the legitimacy of Washington's own measures while signaling that "unreliable" Chinese companies will be shut out of US government contracts going forward.


mokiya@heraldcorp.com