US defence department adds drone maker DJI and BGI Genomics to blacklist it links to Chinese military

Second tranche of Chinese firms, including China State Construction Group, added to list, that aims to highlight ‘military-civil fusion strategy’,
Listing clears the way for Commerce Department to restrict US business transactions with the companies

US-China relations

Robert Delaney

Published: 10:24am, 6 Oct 2022

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The US defence department on Wednesday added Shenzhen-based DJI Technology Co, the world’s largest maker of consumer drones, to a list of Chinese companies that it deems to be connected to Beijing’s military, along with a dozen other hi-tech firms.

The move – which clears the way for the US Commerce Department to enact restrictions on US business transactions with the companies, including investments – follows the publication of an initial blacklist last year. The list was required by last year’s National Defence Authorisation Act (NDAA), annual must-pass legislation that guides funding for the US military.

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The Pentagon’s initial list included Huawei Technologies – which was already on the Commerce Department’s list of firms barred from acquiring US technology, also known as the Entity List – and dozens of other companies.

The second tranche also includes BGI Genomics, China’s largest genomics firm, and infrastructure giant China State Construction Group.

The Pentagon “is determined to highlight and counter the … military-civil fusion strategy, which supports the modernisation goals of the People’s Liberation Army by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities and research programmes that appear to be civilian entities”, the department announced.

Wednesday’s announcement follows a series of US government restrictions on transactions with Chinese companies, based on concerns that these business ties can ultimately support the PLA’s growth and modernisation.

These moves started in 2019 with a stronger mandate given to the Committee on Foreign Investment in the United States to reject foreign acquisitions with the potential to undermine national security, part of the NDAA in 2019, and the addition of Huawei and other Chinese companies to the Commerce Department’s blacklist.

DJI came under greater scrutiny towards the start of Russia’s war in Ukraine owing to allegations that the Russian army had been deploying the company’s drones in the conflict.

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That concern intensified weeks ago after a social media post by Russia’s Beijing embassy that praised the utility of DJI products in modern warfare.

DJI denied the claims on Weibo, which were based on a report by Russian state media outlet Sputnik about a new book by Army General Yuri Baluyevsky, the former chief of the general staff of the Armed Forces of the Russian Federation.

The Commerce Department’s Entity List includes nearly 300 Chinese companies, with the latest additions – including seven state-affiliated firms in the aerospace and chips sector – registered in August.

Earlier this year, the department also announced restrictions on transactions with 33 Chinese organisations whose ownership is deemed to be “unverified”, and therefore presumed to have possible military connections.

The new “unverified list” entries are primarily hi-tech manufacturers, including those that produce laser components and pharmaceuticals, and government research labs. US companies seeking to export to entities on the list must obtain a licence to do so.