NEW FDD REPORT HIGHLIGHTS SIGNIFICANT GAPS IN PENTAGON’S EFFORTS TO DOCUMENT CHINESE MILITARY INFLUENCE IN THE UNITED STATES

Researchers identify Chinese military-linked companies in U.S. that have escaped DoD scrutiny

WASHINGTON, D.C., May 27, 2021 – While the Pentagon has identified 44 Chinese companies operating in the United States with ties to the People’s Liberation Army (PLA), a new Foundation for Defense of Democracies (FDD) report sheds light on additional Chinese military-linked companies operating in the U.S. but have avoided examination, reflecting significant gaps in the Pentagon’s efforts to document Chinese military influence in America.

The finding is one of several in “Defusing Military-Civil Fusion: The Need to Identify and Respond to Chinese Military Companies,” which documents connections between Chinese-linked companies in the U.S. and the Chinese military and military civil fusion (MCF) apparatus.

The authors warn that Chinese Communist Party (CCP) military companies operating in the United States will exploit U.S. resources for malign ends and foster U.S. dependence on CCP military companies.

The report focuses on three overlapping groups reflecting core components of the CCP MCF program: state-owned backbone military-industrial enterprises, companies building global infrastructure and standards, and elements of China’s military-academic complex.

Authors and Senior Fellows Nathan Picarsic and Emily de la Bruyère of FDD’s China Program explain that, in 1999, Congress directed the Department of Defense to document “Communist Chinese military companies” operating directly or indirectly in the U.S. For two decades there was no progress until 2020, when the mandate resurfaced along with increased attention in Washington to China’s military-civil fusion and Beijing’s competitive threat more broadly.

Since 2020, DoD identified the 44 U.S.-based companies with ties to the PLA, including traditional Chinese defense contractors and information technology companies. They include entities purchasing aerospace firms in Michigan and Alabama, developing real estate in California, selling subway cars to the Massachusetts Bay Transit Authority, and establishing research and development centers in Silicon Valley.

“The companies that DoD has listed so far represent just the tip of the iceberg,” the authors write. “This report identifies additional Chinese military-linked companies that operate in the U.S. but have escaped scrutiny. These reflect broader gaps in the DoD documentation effort.”

Such gaps will always exist, the authors write, but rather than trying to identify every Chinese military-tied company, DoD should adopt a clear prioritization framework to target the companies that matter most. They offer a proposed framework that accounts for companies’ roles within the military civil fusion system as well as America’s vulnerability to them.

“This is more than making lists. The report also calls for operationalization. It calls for policies that inspire responsive action, not just list-making, on the part of the government and the private sector,” the authors write.

Picarsic and de la Bruyère make three key policy recommendations:

• U.S. policy responses to China’s military-civil fusion strategy should secure and invest in U.S. and allied supply chains. Defensive strategies are insufficient. These amount to whack-a-mole efforts to cut off the CCP. Rather, the U.S. should develop positive alternatives to supply chains subverted by the CCP, as well as models of engagement with partners that face coercion from Beijing.
• The White House and DoD – with Congressional oversight and support – should develop a prioritization framework for documenting Chinese military companies and military-civil fusion contributors based on a taxonomy of valuable and vulnerable sectors and actors. This prioritization should be implemented across documentation efforts transparently and based on engagement with U.S. and allied private sectors that face threats from Chinese military companies.
• Documentation of Chinese military companies and military-civil fusion contributors should be operationalized across the interagency. Though imperfect, Executive Order 13959 provides a template for action that should be considered and improved upon by relevant governmental authorities that have responsibility for regulating U.S. capital markets, obligating Federal funds, and implementing national security strategy.

To contact FDD media relations, please email [email protected].

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Through FDD’s Center on Military and Political Power, Center on Economic and Financial Power, and Center on Cyber and Technology Innovation, FDD experts conduct in-depth research, produce accurate and timely analyses and provide policy options – with the aim of using all instruments of American power to strengthen U.S. national security. Each center is comprised of a team of FDD domain experts as well as a top-level board of advisors, who provide strategic guidance, help lead initiatives, and promote research.