Drone Maker DJI Loses Lawsuit Over Inclusion on Pentagon’s ‘Chinese Military Company’ List
Udumbara
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China-based drone maker DJI will remain on the Pentagon’s blacklist of Chinese companies working with Beijing’s military, after a D.C. federal judge dismissed its lawsuit challenging the designation on Sept. 26.
“DJI acknowledges that its technology can and is used in military conflict but asserts that its policies prohibit such use,” Friedman wrote. “Whether or not DJI’s policies prohibit military use is irrelevant. That does not change the fact that DJI’s technology has both substantial theoretical and actual military application.”
In other words, Friedman concluded that the Pentagon had presented enough evidence to call DJI a “military-civil fusion contributor” to China’s defense industrial base.
Friedman explained that companies on the Pentagon list are barred from accessing certain U.S. grants, contracts, loans, and other programs.
One of the deciding factors in the ruling was the recognition by the Chinese regime’s top economic planner, the National Development and Reform Commission (NDRC), of DJI as a “National Enterprise Technology Center” (NETC). According to the judge’s opinion, Chinese companies with the NDRC’s designation would benefit from “free cash subsidies,” “special financial support” from China’s Ministry of Science and Technology, and “a large number of tax benefits.”
Friedman dismissed DJI’s argument that the Pentagon had not provided substantial evidence that it was “currently receiving assistance in connection with its NETC designation.”
“In light of DJI’s substantial history of receiving these other forms of assistance from various Chinese governmental entities, it is reasonable to infer that DJI is also receiving assistance through the NETC program,” Friedman wrote.
“The fact that NETC recognition is orchestrated by the NDRC—an institution that has a close connection to Chinese military planning—is sufficient for purposes of Section 1260H.”
The judge rejected some of the Pentagon’s other justifications for putting DJI on the list.
For instance, the Pentagon could only show that a Chinese state-owned company called Chengtong “has some unspecified ownership stake in DJI,” Friedman wrote, but it would need to provide more evidence to prove that this ownership meant that the Chinese Communist Party indirectly owns the Chinese drone maker.
In a statement issued on Friday, DJI said it was disappointed by the judge’s ruling and was evaluating its legal options.
“This decision was based on a single rationale that applies to many companies that have never been listed,” DJI said.
