Five Chinese state-linked firms have been blocked from playing any role in a UK Government-led scheme to help rebuild Ukraine because of tensions between the US and China.
The clause is in contracts advertised to companies by the UK’s Foreign, Commonwealth and Development Office (FCDO) for the supply of vehicles and demining equipment as part of the Partnership Fund for a Resilient Ukraine (PFRU).
The scheme is being led by the Foreign Office in collaboration with the Ukraine Government and other governments, including the US. It is designed to help rebuild areas of Ukraine now under Government control.
Five Chinese companies, including the Huawei and Hangzhou Hikvision technology companies, were barred from applying to take part, according to the publicly available Government documents.
Experts told i it was a “highly unusual arrangement” and it is atypical within Government contracts to see named companies that the US believes raise security concerns excluded.
The contracts say: “Any and all items that are made by Huawei Technology Company, ZTE Corporation, Hytera Communications Corporation, Hangzhou Hikvision Digital Technology Company, Dahua Technology Company will not be accepted. If tenders include items from these entities, please note that they will be deemed not technically responsive and excluded from competition.”
The US Government banned the import or sale of communications equipment from the five companies within the US in November 2022, after the firms were added to a “Covered List”, which prevents new or updated products from numerous manufacturers being sold. The companies have been accused of posing an “unacceptable risk to the national security” of the United States, according to a US Federal department responsible for communications regulation. Chemonics, a US aid firm, is handling the contracts on behalf of the Foreign Office.
Other companies not named on the contract who are listed by the US Government’s communications regulator as a national security risk include other Russian and Chinese firms.
A UK Government official told i that the sub-contracting process for the PRFU scheme was run by Chemonics and that the contracts were not the Government’s responsibility. However, the FCDO is listed as the relevant authority on the contracts.
The scheme is being led by the Foreign Office, with funding coming from other Governments including the US, Switzerland and Sweden among others.
One executive at a major UK Government contractor told i that the naming of firms on the contract was “highly unusual” and unlike any Government-affiliated contract he had seen before.
Sam Goodman, Director of Policy at Hong Kong Watch, told i that the stipulations proved a more aggressive approach was needed from the UK Government to Chinese state-linked firms.
The UK Government has recently U-turned on plans to crack down on Chinese state-linked firms in the procurement bill, which campaigners had hoped could limit access to government work for firms that raise security concerns or are implicated in human rights abuses.
Mr Goodman said: “At a time when the Government has removed provisions within the Procurement Bill which would have required the publication of a timetable for the removal of Hikvision and Dahua Technology from the UK’s procurement supply chain, it is curious to see the FCDO advertise tender contracts for Ukraine that expressly exclude Chinese surveillance companies subject to an investment ban by the USA.
“If Ministers are willing at the behest of the US Government to exclude Hikvision, Dahua, and others from government procurement contracts, than it is well past time they did the same for local authorities, police forces, NHS trusts, and schools.”
Luke de Pulford of the Inter-Parliamentary Alliance on China praised the move, but called for it to be expanded. Mr De Pulford said: “This is encouraging news. The British public don’t want their hard earned money filling the pockets of these companies, especially given Beijing’s “no limits” support for Russia. But it’s also reflective of the total incoherence of UK/China policy. On the one hand we have the UK refusing to ban TikTok when other governments have done on data security grounds, and on the other we see these assertive contract exclusions in Ukraine. We desperately need to see some coherence, as the confusion can and will be exploited by Beijing.”
The UK Government have recently lagged behind other western nations in combatting perceived security threats from China.
Both the EU and the US have banned TikTok from federal devices over data collection concerns. TikTok’s owner ByteDance has faced questions over its relationship to the Chinese state, with allegations of censorship on the app. TikTok has claimed it does not censor content.
Rishi Sunak signalled the end to the “golden era” of UK/Chinese relations in November, in his first major foreign policy speech as Prime Minister.
The claim followed increasing hostility between the UK and China, after years of tensions. i previously revealed how a hidden Chinese tracking device was found in a Government car last year.
An FCDO spokesperson said: “As the US is a partner of the PFRU – and Chemonics International a US company – Chemonics are required to comply with any relevant US policy and regulations. This is standard practice for a commercial procurement of this sort.”
Chemonics did not respond to multiple requests for comment. Huawei, Hikvision, ZTE, Dahua and Hytera were also approached for comment.