US designates more Chinese tech companies as offshoots of military, may impose more sanctions

The Pentagon designated over a dozen Chinese tech companies, including Yangtze Memory Technologies Corp (YMTC), as “military companies,” citing national security concerns for the United States.

Among these entities are artificial intelligence firms Yitu Technology and Beijing Megvii, drone manufacturer Chengdu JOUAV, lidar maker Hesai Technology, and tech company NetPosa, all of which operate in the US but haveen been accused of having ties to the Chinese military.

These additions to the 1260H list, established under the National Defence Authorisation Act for fiscal year 2021, inform US and international companies about entities potentially supporting Beijing’s military-industrial complex.

While being listed does not impose a complete ban, it renders the firms ineligible for Defence Department contracts and may lead to blacklisting by the US Treasury Department, affecting their business prospects.

Three Chinese firms were removed from the updated list, but others, like DJI Technology and BGI, remain on it. China’s embassy in Washington criticized the move, accusing the US of overstretching national security and undermining its own interests.

The identification of “Chinese military companies” aligns with Washington’s broader effort to restrict US investment in entities involved in dual-use technologies that could enhance the Chinese military’s capabilities.

President Joe Biden’s executive order in August banned certain US investments in China, particularly those related to sensitive technologies such as artificial intelligence. Representative Blaine Luetkemeyer praised Biden’s action during a congressional hearing, suggesting that legislative measures could further enhance it.

(With inputs from agencies)