In response to the Department of Defense's (DoD) recent updates to the Section 1260H List, we have observed an increase in inquiries from our clients. The DoD's latest revision has led to the inclusion of seventeen new entities, with three being removed from the previous list. This update has demonstrated congressional attention, signaling active oversight and the possibility of enacting stricter legislative measures.
According to the Fiscal Year (FY) 2021 National Defense Authorization Act (NDAA), the DoD is required to annually identify Chinese military companies operating within the U.S., using the most up-to-date information available. This recent amendment is part of a concerted effort to counter China's Military-Civil Fusion Strategy, aimed at preventing civilian businesses from merging into Chinese military endeavors.
The definition of a "Chinese Military Company" is explicitly defined under Section 1260H (d) of NDAA. It encompasses entities involved in commercial services, manufacturing, producing, or exporting that are either under the direct or indirect ownership, control, or influence of the People's Liberation Army or any entity subordinate to the Chinese Communist Party's Central Military Commission, or identified as contributors to military-civil fusion. A detailed definition is available under here , Section 1260H,Public Reporting Of Chinese Military Companies Operating In The United States.
It is essential to note that inclusion on Section 1260H List does not automatically result in immediate legal repercussions unless the entity appears on other restricted party lists. Nevertheless, a thorough review of the updated list and careful reassessment of any associations with listed entities are advised.
It's crucial to recognize that being listed on the Section 1260H List does not, in itself, trigger immediate legal consequences unless the entity is also flagged on other restricted party lists. Nonetheless, we advise a comprehensive review of the revised list and a careful reassessment of any affiliations with the entities listed.
In a related development, Hesai Technology (禾赛科技), a leading Chinese lidar company, has announced plans to challenge its placement on this list. The company's CEO has condemned the U.S. decision as "unjust, capricious, and without merit," arguing it stems from a competitive lobbying campaign aimed at exploiting anti-China sentiment in the U.S. for commercial gain.
As discussions continue in Congress regarding the imposition of stricter restrictions on entities listed under Section 1260H, it is crucial for stakeholders to stay informed and be proactive. Should you have any questions regarding this list or wish to explore its potential impacts further, we encourage you to contact us for guidance and support.
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