Major Chinese solar and battery manufacturers feature in the Pentagon's latest update for Chinese military companies
The revised list includes companies from clean energy and technology sectors and other strategic industries
The US Department of War indicated further actions remain possible
The US Department of Defense has added several leading solar and battery manufacturers to its latest list of "Chinese military companies" (CMC) operating directly or indirectly in the United States. The updated list also covers companies across a range of sectors, including electric vehicles (EVs), telecommunications, semiconductors, and technology.
Among the newly listed firms are JA Solar Technology Co., Ltd. (now branded as JA), Trina Solar Co., Ltd., Contemporary Amperex Technology Co., Ltd. (CATL), BYD Company Limited, and EVE Energy Co., Ltd.
The update was issued under Section 1260H of the National Defense Authorization Act (NDAA) for Fiscal Year 2021. In total, the Pentagon identified 188 entities that it said meet the statutory criteria for inclusion on the list.
According to the document, JA Solar and Trinasolar were designated as military-civil fusion contributors to China's defense industrial base. These companies appear on the US list for ‘knowingly’ receiving assistance from the Chinese government through industrial and technology programs linked to China’s military-industrial planning. Trinasolar also resides in a military-civil fusion enterprise zone, as per the update.
Both JA and Trinasolar were active in the US solar manufacturing space, but later divested their investments. While JA sold its 2 GW solar module factory to Corning, Trinasolar sold its 5 GW module plant to FREYR, now T1 Energy (see Amid ‘Geopolitical Risks’ Trinasolar Sells Off 5 GW US Solar Module Plant).
CATL, BYD and EVE Energy were also included among battery and energy storage companies named in the update. Both CATL and BYD, says the US department, are indirectly affiliated with the Chinese Ministry of Industry and Information Technology (MIIT), and directly and indirectly affiliated the Asian country’s State-Owned Assets Supervision and Administration Commission of the State Council (SASAC).
BYD is also named as a military-civil fusion contributor to the Chinese defense industrial base because it resides in or affiliated with a military-civil fusion enterprise zone.
Military-civil fusion (MCF) is an ‘aggressive national strategy’ of the Chinese Communist Party (CCP) that uses civilian technology and innovation to support military modernization and development, according to US Department of State.
Another Chinese battery manufacturer on the list is CALB Group for its indirect ownership by SASAC and direct and indirect affiliation with SASAC. A lithium-ion battery manufacturer CALB is building a gigafactory in Portugal with reportedly 15 GWh annual capacity (see China’s CALB Hires Mota-Engil For €2Bn Portuguese Gigafactory).
Solar inverter and energy storage system (ESS) company Huawei Investment & Holding/Huawei Technologies is also listed as a CMC.
Companies such as Alibaba Group Holding Limited and Tencent Holdings Limited also appear on the roster. The Pentagon said it may continue to update the list and noted that the US government reserves the right to take additional actions against listed entities under authorities beyond Section 1260H.
According to Morgan Lewis law firm, while there was no immediate harm of being included in the CMC list beyond reputational damage, later revisions to the NDAA added Department of Defence (DOD) procurement prohibitions linked to the list. For the US companies dealing with the CMC listed companies also means they will need to be careful while dealing with them as well as be ready to face potential Chinese law risks if they take adverse actions against CMC-designated companies.
In a news report Reuters says the Department of War will be prohibited from contracting directly with companies on the list and restricted from buying their products or services through 3rd parties from 2027.
Speaking to the media, Chinese Foreign Ministry Spokesperson Lin Jian opposed the US government decision and promised to take necessary measures. He said, “China has consistently and firmly opposed the US's overgeneralization of the concept of national security, its creation of various discriminatory lists, and its unreasonable suppression of Chinese companies. We urge the US to correct its erroneous practices and cease its unreasonable suppression of Chinese companies. China will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese companies.”