Trump administration says Huawei, Hikvision backed by Chinese military


Published Thu, Jun 25 202012:16 AM EDT

Key Points

  • The Trump administration has determined that top Chinese firms, including telecoms equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military, laying the groundwork for new U.S. financial sanctions.

  • The designations were drawn up by the Defense Department, which was mandated by a 1999 law to compile a list of Chinese military companies operating in the United States, including those “owned or controlled” by the People’s Liberation Army that provide commercial services, manufacture, produce or export.

  • The Pentagon’s designations do not trigger penalties, but the law says the president may impose sanctions that could include blocking all property of the listed parties.

The Trump administration has determined that top Chinese firms, including telecoms equipment giant Huawei Technologies and video surveillance company Hikvision, are owned or controlled by the Chinese military, laying the groundwork for new U.S. financial sanctions.

Washington placed Huawei and Hikvision on a trade blacklist last year over national security concerns and has led an international campaign to convince allies to exclude Huawei from their 5G networks.

A Department of Defense (DOD) document listing 20 companies operating in the United States that Washington alleges are backed by the Chinese military was first reported by Reuters.

The DOD document also includes China Mobile Communications Group and China Telecommunications Corp as well as aircraft manufacturer Aviation Industry Corp of China.

The designations were drawn up by the Defense Department, which was mandated by a 1999 law to compile a list of Chinese military companies operating in the United States, including those “owned or controlled” by the People’s Liberation Army that provide commercial services, manufacture, produce or export.

The Pentagon’s designations do not trigger penalties, but the law says the president may impose sanctions that could include blocking all property of the listed parties.

Huawei, China Mobile, China Telecom, AVIC and the Chinese Embassy in Washington did not respond to requests for comment.

Hikvision called the allegations “baseless,” noting it was not a “Chinese military company,” and had never participated in any R&D work for military applications but would work with the United States government to resolve the matter.

The Pentagon has come under pressure from lawmakers of both U.S. political parties to publish the list, amid rising tensions between Washington and Beijing over technology, trade and foreign policy.

Last September, top U.S. Senate Democrat Chuck Schumer, Republican Senator Tom Cotton and Republican Representative Mike Gallagher penned a letter to Defense Secretary Mark Esper raising concerns about Beijing’s enlisting of Chinese corporations to harness emerging civilian technologies for military purposes.

Will you commit to updating and publicly releasing this list as soon as possible?” they asked in the letter.

On Wednesday, Cotton and Gallagher praised the DOD for releasing the list and urging the president to impose economic penalties against the firms.

The White House did not comment on whether it would sanction the companies on the list, but a senior administration official said the list can be seen as “a useful tool for the U.S. Government, companies, investors, academic institutions, and likeminded partners to conduct due diligence with regard to partnerships with these entities, particularly as the list grows.”

The list will likely add to tensions between the world’s two largest economies, which have been at loggerheads over the handling of the coronavirus pandemic and China’s move to impose security legislation on Hong Kong, among multiple points of friction that have worsened this year.

Last week, China threatened retaliation after President Donald Trump signed legislation calling for sanctions over the repression of China’s Uighurs.

The list “is a start, but woefully inadequate to warn the American people about the state-owned and -directed companies that support the Chinese government and Communist Party’s activities threatening U.S. economic and national security,” Republican Senator Marco Rubio, who sponsored the Uighur bill, said in a statement.

Spotlight on U.S. ties

The list will also turn a spotlight on U.S. companies’ ties to the Chinese firms as well as their operations in the United States.

In 2012, U.S.-based General Electric set up a 50/50 avionics joint venture with AVIC known as Aviage Systems, to supply equipment for China’s C919 passenger jet.

The Defense Department list also includes China Railway Construction Corp, China Aerospace Science and Industry Corp (CASIC), as well as CRRC, the world’s largest maker of passenger trains, which has clinched contracts in Boston, Philadelphia, Chicago and Los Angeles by underbidding rivals.

The companies did not immediately respond to requests for comment.

Many of the firms listed are already in the crosshairs of U.S. regulators.

The blacklisting of Huawei and Hikvision has forced some of their U.S. suppliers to seek licenses before selling to them.

In April, the U.S. Justice Department and other federal agencies called on the Federal Communications Commission to revoke China Telecom (Americas) Corp’s authorization to provide international telecommunications services to and from the United States. The telecoms regulator rejected a similar request by China Mobile last year that had been pending for years.

Source: CNBC “Trump administration says Huawei, Hikvision backed by Chinese military”

Note: This is CNBC’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China to set up system to safeguard technology security


Published June 8, 2019

China plans to establish a system to ensure “national security” in technology, state media reported on Saturday amid an expanding trade war with the United States which has snared Chinese tech titan Huawei.

The powerful National Development and Reform Commission has been tasked with establishing a list system to “more effectively forestall and defuse national security risks,” the Xinhua news agency said.

Xinhua did not elaborate or state whether the move was linked to the trade war but said, “detailed measures will be unveiled in the near future”.

Washington and Beijing resumed their trade battle last month when trade talks in the US ended without a deal and US President Donald Trump raised tariffs on $200 billion in Chinese goods, which Beijing retaliated to with its own tariff hike on billions worth US goods.

The trade war has stepped up in recent weeks with Washington’s move to blacklist Huawei over national security concerns, threatening the firm’s global ambitions.

The US Commerce Department placed Huawei on an “entity list” on grounds of national security on May 16, a move that curbs its access to US-made components it needs for its equipment. A 90-day reprieve was later issued.

“Based on what I know, China is building a management mechanism to protect China’s key technologies,” Hu Xijin, the influential editor of the Chinese daily Global Times, said Saturday on Twitter.

“This is a major step to improve its system, and also a move to counter US crackdown. Once taking effect, some technology exports to the US will be subject to the control,” Hu said.

China accuses Trump of wanting to thwart Huawei’s development because the company is the world leader in next-generation 5G mobile technology and faces no US competition.

Following Washington’s move, Beijing on Thursday said it would draw up its own blacklist of “unreliable” foreign companies, which could target US and international firms that have cut off supplies to Huawei.

Source: punchng.com “China to set up system to safeguard technology security”

Note: This is punchng.com’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


China prepares to strike back at US as Huawei suffers another loss


SoftBank snubs Huawei for 5G equipment while China mulls rare earths embargo

By Vlad Savov@vladsavov May 31, 2019,

The trade tension between the United States and China looks set to intensify soon, as the latter country is taking steps to respond to the American ban on doing business with Huawei. Bloomberg reports that China has put preparations in place to restrict exports of rare earth minerals to the US, while also setting up its own “unreliable entities” blacklist for unfavorable foreign companies. At the same time, Japan’s SoftBank has announced it’ll be building its 5G network with equipment from Nokia and Ericsson, snubbing Huawei, which had been a 4G supplier for the large mobile carrier.

The rare earths export restriction looks to be an act of saber rattling for now. The leadership in Beijing is signaling that it’s ready and willing to deploy this severe measure, but, according to Bloomberg, that’s only in the event that the trade war between China and the US deepens. Neodymium is one of the most recognizable rare earths, as it’s widely used in magnets. You’ll have seen it advertised on the spec sheet of your headphones, most likely, and there’s a broad consensus among economists and international trade observers that US companies have no good alternative sources for it outside of China.

As to the Chinese entity list, this echoes the language of the US Bureau of Industry and Security’s Entity List on which Huawei finds itself now. That could well be a deliberate sign of a tit-for-tat response, as China doesn’t really need a formal list, having already imposed bans on a number of prominent US businesses like Google and Facebook. The list will cover “foreign enterprises, organizations and individuals that don’t obey market rules, violate contracts and block, cut off supply for non-commercial reasons or severely damage the legitimate interests of Chinese companies,” according to China National Radio, citing a government official. In simple terms, China is mirroring the actions of the US and taking on a more assertive posture as it heads into its next round of negotiations.

Huawei, the company that finds itself the focus of friction in the present trade dispute, has taken a significant loss in the form of SoftBank’s 5G business. There’s rarely been dispute about the performance of Huawei’s networking equipment, however worries about its security vulnerabilities and the company’s relationship with the Chinese government have been weighing on the minds of its business customers. SoftBank’s decision now is likely a mix of that track record and the present turbulence caused by the US blacklisting of Huawei. This is one of those consequences that will have a lingering impact no matter how soon US-China trade relations improve. Even if the current impasse is resolved swiftly, Huawei’s reputation as a trustworthy smartphone maker for consumers and a reliable 5G vendor for mobile operators will remain tarnished.

Source: The Verge “China prepares to strike back at US as Huawei suffers another loss”

Note: This is The Verge’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.