Pentagon can call DJI a Chinese Military Company, court rules

"Last October, dronemaker DJI sued the US Department of Defense, arguing it should no longer face the stigma of being listed as a "Chinese Military Company" and continue to risk business as a result. While US District Court judge Paul Friedman "cannot conclude" that DJI is "indirectly owned by the Chinese Communist Party," he found that that DoD has broad discretion to decide which companies do and do not belong on the list of Chinese military companies."

"Friedman concluded there was enough evidence that DJI is supported and recognized by the Chinese government to call it a "a military-civil fusion contributor," and that state-sponsored entity Chengtong has "some unspecified ownership stake" in the company. Just being a "military-civil fusion contributor" is enough to label it a Chinese Military Company as well, according to the rules (section 1260H) for that designation."

"He also rejected quite a few of the DoD's other claims for insufficient evidence, and pointed out that it confused two of China's different industrial development zones when trying to prove DJI's factories were located in a special state-sponsored zone. But the fact that China's National Development and Reform Commission designates DJI as a "National Enterprise Technology Center," which gives it large cash subsidies, "special financial support" and "a large number of tax benefits" was enough for this judge to agree that the DoD can call it a Chinese Military Company if it wants."

DJI sued the U.S. Department of Defense to remove its designation as a Chinese Military Company. The judge found insufficient evidence that DJI is indirectly owned by the Chinese Communist Party but determined the DoD has broad discretion over the list. The court found evidence that DJI is supported and recognized by the Chinese government, identified as a military-civil fusion contributor, and noted an unspecified Chengtong stake. The judge rejected several DoD claims for lack of evidence and flagged a zoning confusion. The NDRC designation, with subsidies and tax benefits, justified allowing the DoD to list DJI. DJI faces an impending U.S. import ban.

Read at The Verge