Telecoms firm Huawei has been named on a list of companies that the Trump administration says are owned or controlled by the Chinese military.
The list could lay the groundwork for tougher financial sanctions and comes at a time when simmering tensions between the two countries are again coming to the surface.
Washington put Huawei on a trade blacklist last year over national security concerns and has led a campaign to convince global allies to exclude the company from their 5G networks.
Britain earlier this year decided to allow the Chinese firm’s equipment to have a limited role in its network – but more recently has said it would reassess that decision following a ramping up of sanctions against Huawei by the US.
Conservative backbenchers have also been urging the government to take a harder line.
The US company list, drawn up by the defence department, names 20 companies including Huawei as well as video surveillance company Hikvision, China Telecommunications Corp and aircraft manufacturer Aviation Industry Corp of China (AVIC).
The designation of companies as “owned or controlled” by the People’s Liberation Army was drawn up under a 1999 law mandating the Pentagon to compile such a list.
Being on the list does not in itself trigger any penalties but the law states that the president may impose sanctions on the companies on it.
The White House did not comment on whether it would take any such action.
But a senior administration official said it could be “a useful tool for the US government, companies, investors, academic institutions, and like-minded partners to conduct due diligence with regard to partnerships with these entities, particularly as the list grows”.
It is likely to add to tensions between the world’s two largest economies, which have been at loggerheads over the handling of the coronavirus pandemic and China’s move to impose security legislation on Hong Kong, as well as over trade.
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Huawei, China Telecom, AVIC and the Chinese Embassy in Washington did not immediately respond to requests for comment.
Hikvision called the allegations “baseless,” noting it was not a “Chinese military company” and that it had never participated in any research and development work for military applications.
It said it would work with the United States government to resolve the matter.