The U.S. House of Representatives passed the National Defense Authorization Act (NDAA), the annual defense policy bill, on June 14, 2024. This $895.3 billion bill passed the House of Representatives with a vote of 217 to 199, authorizing policies, programs, and spending for the Department of Defense (DoD). Several provisions of the House bill directly target China and China-related entities. On June 13, the Senate Armed Services Committee wrapped up its 12-hour closed-door markup, approving a $912 billion defense policy bill on a 22-3 vote. The Senate plans to vote on its own NDAA this summer, and the two chambers will have to conference their respective bills to reach a compromise before the end of the year. Accordingly, it is not certain that these provisions will remain unchanged in the final product.
However, it is important to note that the House bill includes several provisions related to China, including provisions for dedicated funding for the office within the DoD that maintains the 1260H list on Chinese military companies, new restrictions on research institutions with ties to China, and a new study of shipping containers.
DoD’s 1260H List
The legislation provides dedicated funding for the DoD office that identifies Chinese military companies on its 1260H list. Dedicated funding will ensure that the DoD continues to prioritize the accuracy of its list, as the agency will have the necessary resources to accurately identify suspected companies. Currently, associated restrictions with being named to the 1260H list are limited to DoD contracting opportunities. For example, DoD is prohibited from purchasing goods or services produced or developed by listed companies. Starting on June 30, 2026, DoD will also be prohibited from renewing or extending current contracts with named companies. In addition to these restrictions, there is clear reputational risk for being a named company. As such, companies should conduct appropriate due diligence of their business partners.1
Restrictions on Research Institutions
Second, the House NDAA prohibits colleges and universities that collaborate with the DoD and conduct DoD funded research from also forming agreements with foreign entities of concern. As a result, Chinese companies identified as entities of concern will be limited in their access to advanced research and technological developments.2 This is a continuation and expansion on existing policy. For example, in 2023, DoD issued a memorandum outlining new requirements in its efforts: “Counter Unwanted Foreign Influence in Department-Funded Research at Institutions of Higher Education.” This memorandum discusses DoD’s processes to review proposals from higher education institutions for fundamental research opportunities, emphasizing security threats posed by China, Russia, and other actors.3 The policy also requires universities and research laboratories receiving DoD funding to pay close attention to their foreign talent recruitment programs.4
Study of Shipping Containers
The House’s NDAA requires a study and report on the production and acquisition of shipping containers from foreign adversaries. This provision was included after Congressman Dusty Johnson's (R-S.D.) amendment was adopted unanimously. The provision was prompted by the discovery that over 95% of the global inventory of shipping containers are manufactured in China.
Once complete, this study could lead to regulations or restrictions on the reliance of Chinese shipping containers, affecting Chinese companies involved in the manufacturing and export of these containers. Furthermore, it may require companies that engage in business with Chinese shipping container manufacturers to invest more in compliance and disclosure policies to meet new legal requirements.
Touting these provisions, Chairman Moolenaar of the House Select Committee on Strategic Competition between the US and the Communist China said in a press release:
“The 2025 NDAA is a victory for the American people and our courageous servicemembers … I’m proud that the House has taken decisive action to enhance the Department of Defense’s ability to identify Chinese companies working on behalf of the Chinese military, prevent future Chinese drones from dominating our air space, and advance American research security, among many other accomplishments. I look forward to working with my colleagues in the Senate on this important legislation that will keep our country safe…”
The Senate will take up the NDAA in July and the two Houses will reconcile their respective bills before the NDAA is presented to President Biden for his signature.
1 DEPT. OF DEF., Entities Identified as Chinese Military Companies Operating in the United States in accordance with Section 1260H of the William M. (“Mac”) Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116-283).
2 According to Section 225 of the bill, the definition of “Foreign Entity of Concern” is given in Section 10612(a) of the Research and Development, Competition, and Innovation Act (42 U.S.C. 19221 (a)). It includes foreign entities that are identified on the list published under Section 1286(c)(9)(A) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019. See H.R. 8070, 118th Cong. (2024).
3 DEPT. OF DEF., Counter Unwanted Foreign Influence in Department – Funded Research At Institutions of Higher Education (June 29, 2023).
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