Nervous USA Bars Chinese Firms from Defense Department Contracts

WASHINGTON - The U.S. House of Representatives has broadened the type of Chinese entities barred from receiving Pentagon contracts amid growing unease in Washington over China's expanding military might.About time they did something, rather than bowing to Chinese financial muscle and lately military muscle.

Under the amendment, passed by voice vote May 25, all entities owned by or affiliated with the Chinese government are prohibited from providing defense articles to the United States and the U.S. secretary of defense must report to Congress 15 days before any planned waiver of the ban.

"With China making significant progress in the defense and aerospace industries it is critical that we ensure U.S. national security is protected and that the highly skilled jobs and associated technologies in these industries are not outsourced overseas," Rep. Rosa DeLauro said in a statement.

The Connecticut Democrat said the measure "will help guard American interests, not only for our national security, but also the innovation, job creation and long-term economic growth in Connecticut and across the country that will allow the United States to remain competitive globally."

Chinese state-controlled firm China Aviation Industry Corp, or AVIC, is said to be weighing a bid for the contract to produce the next U.S. presidential helicopter, prompting concerns in Washington about the possibility that Beijing may obtain U.S. military secrets.

DeLauro's measure, also sponsored by Republican Rep. Frank Wolf, is among dozens of amendments to the fiscal 2012 National Defense Authorization Act - the Pentagon's budget bill - currently being debated in the House.

It allows the secretary of defense to issue a waiver on the procurement limitations "if the good or service is critical to the needs of the Department of Defense and is otherwise unavailable to the Department of Defense" and indicating its reasoning in a report to Congress.

Companies affected by the amendment include any commercial firm "owned or controlled by, directed by or from, operating with delegated authority from, or affiliated with, the People's Liberation Army or the government of the People's Republic of China or that is owned or controlled by an entity affiliated with the defense industrial base of the People's Republic of China."

"Over the last several years, so-called 'commercial' Chinese companies have sought to compete for DoD contracts. In fact, these Chinese 'companies' are very much arms of Beijing and the People's Liberation Army," said Wolf.

"That is why we believe Congress must act quickly to make clear that it will not support any contract that involves a Chinese state-controlled company for the highly sensitive presidential helicopter program or any other defense system."