Department of Defense Designates Over 50 Top Chinese Corporations as ‘Military Companies’

The United States has broadened its efforts to stymie corporate support for China’s military modernization. On January 6, the Department of Defense (DoD) released an update to its list of Chinese military companies, adding over 50 firms identified as contributing to the activities of the People’s Liberation Army (PLA).

The update includes major Chinese multinationals with operations in the United States, including Tencent, a leading technology firm and owner of WeChat; Contemporary Amperex Technology (CATL), a major global battery manufacturer; and China Overseas Shipping (COSCO), the country’s largest shipping company. While inclusion on the list does not carry legal consequences, the designation alerts U.S. entities to heightened national security risks regarding these firms while discouraging investment by raising concerns over possible future sanctions and restrictions.

DoD Announcement Follows Chinese Restrictions on U.S. Defense Contractors

The announcement follows Beijing’s recent efforts to tighten restrictions on U.S. defense contractors in retaliation for Washington’s export control regime and continued weapons sales to Taiwan. On January 2, China’s Ministry of Commerce placed 28 American firms, including major defense contractors Raytheon, Boeing, and Lockheed Martin, on an export control list to “safeguard national security and interests.” The measure will prevent these companies from importing dual-use goods, which are products that can be used in either civilian or military assets, from Chinese suppliers.

Additionally, the Ministry of Commerce also placed 10 U.S. firms, including Lockheed Martin, General Dynamics, and Raytheon, on its “unreliable entities” list due to their weapons sales to Taipei. This designation prevents these companies from operating in China, along with barring their executives from visiting the country. However, as none of the listed firms conduct any significant business in China, these restrictions are primarily meant to showcase Beijing’s dissatisfaction rather than harm the U.S. economy.   

Beijing Blurs Lines Between Civilian and Military Sectors to Boost Military Modernization

The updated list also highlights China’s efforts to upgrade its defense industrial base by harnessing the strength and international reach of its domestic private sector. Under its policy of military-civil fusion (MCF), Beijing has encouraged private firms to partner with the People’s Liberation Army (PLA) to weaponize cutting-edge civilian innovation. These partnerships have allowed China to rapidly modernize its defense industrial base, accessing advances in biotechnology, artificial intelligence, and other strategic technologies.

The effectiveness of MCF is compounded by Chinese national security law. This law and associated regulations require Chinese private firms to permit Beijing direct access to their data and mandates their cooperation in protecting Chinese national security interests. This process ensures that the PLA and other elements of China’s security and intelligence services can dramatically expand the scope of their reliance on China’s civilian economy to bolster their strength and challenge the United States more effectively.

Washington Must Act to Prevent U.S. Investment Into Chinese Defense-Related Firms

In response to the updated list, the new Congress should prioritize passing outbound investment screening measures to prevent American firms from underwriting Beijing’s military modernization by investing in nominally civilian Chinese firms. Congress should couple these measures with efforts to secure the American defense industrial base from Chinese interference in light of Beijing’s influence over the supply of defense-critical minerals and semiconductors. To offset that influence, there is a need for the United States and its allies to invest in new sources for procuring those goods.

Lastly, the incoming administration should prioritize providing Taiwan with both the arms and regional political support necessary to resist an increasingly aggressive and well-armed China.

Jack Burnham is a research analyst in the China Program at the Foundation for Defense of Democracies (FDD). For more analysis from Jack and FDD, please subscribe HERE. Follow Jack on X @JackBurnham802. Follow FDD on X @FDD. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.