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US Adds More Chinese Military-linked Enterprises to ‘Section 1260H’ Entity List, Including Semiconductor and AI Firms

Published: February 4, 2024
An American flag is shown hung in observance of the 9/11 terrorist attacks at the Pentagon on September 11, 2023 in Arlington, Virginia. (Image: Alex Wong/Getty Images)

By Cheng Fan, Vision Times Staff

Hoping to prevent cutting-edge U.S. technology from being used to support the communist Chinese military, the Pentagon has recently expanded the list of Chinese companies with potential links to the People’s Liberation Army (PLA), naming than a dozen major Chinese enterprises in various sectors, including leading memory chip manufacturers, artificial intelligence (AI), energy, and automotive industries.

Among them, prominent names include memory chip giant Yangtze Memory Technologies Co. Ltd. (YMTC), AI company Megvii Technology, lidar manufacturer Hesai Technology, and tech company NetPosa.

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.

Other entities newly added to the list of “Chinese military enterprises” on Jan. 31 (Wednesday) are the Shanghai-based Yitu Network Technology, Chengdu JOUAV Automation Tech (a drone manufacturer), Chengdu M&S Electronics Technology, China Three Gorges Corp, China Construction Technology Co, Guizhou Aviation Technical Development, and ShenZhen Consys Science&Technology.

In addition, the 2024 National Defense Authorization Act added some teeth to the “Section 1260H” list, prohibiting the Defense Department under Section 805 of the law 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, noting that some Chinese firms have tried to be removed from the list.

On Feb. 1, Communist China’s foreign ministry spokesman Wang Wenbin blasted the Pentagon’s updated list, saying that it violated the principles of fair market competition and would damage the confidence of foreign companies investing or operating in the U.S.

The Chinese Communist Party (CCP) routinely blocks or interferes with foreign companies hoping to do business in China, particularly with its “Great Firewall” that strictly controls what content is allowed for mainland Chinese internet users and bans many non-Chinese social media platforms.

Reuters contributed to this report.