US blacklists 13 Chinese companies including world's biggest drone-maker DJI
As the rivalry between the US and China gathers more heat, the US Department of Defense (DOD) has decided to blacklist more Chinese companies. The list includes some big names, including DJI, the world's biggest drone manufacturer. The Pentagon has blacklisted 13 companies citing their links to the Chinese military. The list earlier had 47 firms, including Huawei.
Why does this story matter?
The US and China have been embroiled in a bitter trade and tech battle. The US has been looking at China's rise in stature with suspicion. The last couple of years has seen the country taking action against Chinese companies in a move to put a stop to their rise. The two giants reaching an amicable agreement seems a distant possibility as of now.
Pentagon terms newly banned firms as 'Chinese military companies'
The Pentagon has blacklisted 13 Chinese companies in accordance with Section 1260H of the William M Thornberry National Defense Authorization Act for the Fiscal Year 2021. The DOD referred to them as "Chinese military companies." In its press release, the department said that it is determined to highlight and thwart China's military-civil fusion strategy. This is the second tranche of blacklisted companies.
Military-civil fusion helps further PRC's modernization aspirations: DOD
The military-civil fusion strategy "supports the modernization goals of the People's Liberation Army (PLA) by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities, and research programs that appear to be civilian entities," the DOD said in a statement. "The Department will continue to update the list with additional entities as appropriate," it added.
Which are the 13 blacklisted companies?
The 13 Chinese companies blacklisted by the Pentagon include Beijing Kownsec, BGI Genomics, China International Engineering Consulting Corporation, China National Chemical Corporation, China National Chemical Engineering Group Corporation, and China State Construction Group. The list also includes CloudWalk Technology, CRRC Corporation Limited, Dawning Information Industry, Global Tone Communication Technology, Shenzhen DJI Innovation Technology (DJI), Zhejiang Dahua Technology (Dahua), and 360 Security Technology.
'DJI is not a military company in China or US'
The list has some big names, including Shenzhen DJI Innovation Technology, or DJI, the biggest drone maker in the world. In response to its addition to the list, the company has said, "DJI does not fall under any categories set by the law to be included on the list. DJI is not a military company in China, the United States, or anywhere else."
Pentagon has always seen DJI as a threat
The Pentagon has always seen DJI as a threat to US national security. Last year, the Treasury Department banned US-based persons from trading the company's shares for its alleged involvement in the surveillance of ethnic minority Uighurs. The list also includes other big names such as gene testing company BGI Genomics, rolling stock manufacturers CRRC Corp., and surveillance company Dahua Technology.
Huawei and SMIC were included in the previous list
The latest blacklisting of 13 Chinese companies is the continuation of the action that began in June 2021. In June last year, the government banned 47 companies, including tech giant Huawei and semiconductor manufacturer SMIC. The US government began taking action against Chinese companies during President Donald Trump's reign, and the current President Joe Biden has followed suit.
Backlisting is a warning to investors
The US government has been trying to counter China in areas ranging from defense to technology. The blacklisting by the DOD is a warning to investors to stay away from the companies included in the list. According to China, the crackdown is to contain China's tech rise. The move could be seen as an in-depth strategy by the US to compete with China.
How will the ban affect Chinese companies?
The impact of this action by the DOD on Chinese companies should be looked at from multiple angles. For starters, this affects the prospect of these companies in the US. The direct investment by Americans in Chinese companies is minimal. However, the ban's impact on indirect investment needs further investigation. The blacklisting would be followed by restrictions by other departments of the US government.
What can the Chinese companies do?
The companies included in the blacklist can always approach a court in the US to get the ban reversed. Smartphone giant Xiaomi followed this path and merged victorious in May 2021. A court had ordered the government to remove Xiaomi from the blacklist. The company later reached an agreement with the government. So, other blacklisted companies can use this as a recourse as well.
