PRC firms, whether state-owned or nominally private, are legally required to function as extensions of the Chinese Communist Party (CCP). The US and Allies must implement targeted sanctions against CCP-aligned entities including the "Little Giants" and "Single Champions." These entities focus on dual-use technologies which bolster the People’s Liberation Army’s (PLA’s) military capability.
What the CCP Wants
We identified what the CCP wants here and most recently here, but to recap, the Chinese Communist Party wants uncontested control over the People’s Republic of China (PRC) and the ability to pursue a political agenda without interference from domestic or foreign actors.
While this sounds reasonable, these goals turn violent considering the oppression of minority groups within China (see the Tibetans and Uyghurs) and the necessity to subjugate or consume neighbors like Taiwan, Philippines, Korea, and Japan. The CCP’s vision for the future is incompatible with that of the PRC’s neighbors and the United States.
How the CCP Plans to Achieve this Goal
Premise 1: The CCP isn’t bluffing when it releases official guidance.
Premise 2: Xi Jinping has reduced PRC state organizations to execution organs of the CCP. PRC state organizations are not a separate but equal power structure. Instead, they carry out the whims of the CCP.
Premise 3: Working with PRC companies means supporting the CCP at some level.
Premise 4: Supporting the CCP has deleterious effects on US, Allied, and partner economies as well as coalition national security. Still, there is a spectrum of damage. Buying textile products from Nantong is not the same as buying Chinese electric vehicles, which is not the same as providing jet engine technology to PRC state-owned defense companies.
While CCP decision-making is often a black box, remember Premise 1: the CCP isn’t bluffing. When the CCP announces policy, we should listen. During the third plenum in July 2024, the CCP published a communique (CN) and decision document (CN) that highlighted CCP intermediate objectives:
“building China’s national resilience and self-reliance; and increasing its national strengths in key strategic sectors, such as science and technology, to become a leader in leveraging ‘new quality productive forces’ that the CCP hopes will underpin economic growth.”
Yes, China has economic problems and the CCP mentions “the people” as an important consideration, but “resilience” and “self-reliance” are key words. The CCP understands that achieving their “core of core interests,” AKA seizing Taiwan, will put extreme stress on every aspect of life in China and the CCP must prepare the country to operate on a wartime footing.
The CCP is taking lessons from Russia’s ongoing experience with Western sanctions. Beijing understands that China cannot move on Taiwan without shoring up industrial sectors that will allow the PLA to protract the fight if necessary.
The method of achieving these intermediate objectives is concretely written in the 14th Five-Year Plan, published in March 2021. The CCP created highly specific policy guidance and the state converted this guidance into actionable policy. The purpose of these policies is to “Persist in the Party's total leadership” (坚持党的全面领导). The economy, the military, and society are organized to serve the Chinese Communist Party.
How the CCP Works Through Merged Party-State Entities - Australian Example
The CCP uses PRC state entities to outwardly conceal the party’s role in Chinese civil society, the economy, and abroad. An example is the Central Science and Technology Commission (CSTC, 中央科技委员会), a CCP organ, and the Ministry of Science & Technology (MOST), a state organ. CSTC establishes specific science and technology directives that support overarching CCP goals. MOST then creates specific policies that can be implemented at the national, provincial, city, and township levels to achieve those directives.
MOST is headed by Lin Hejun, a trusted CCP official who holds dual hats as both MOST’s minister (state role) and party secretary (party role). At lower echelons within MOST and other PRC organizations, there are CCP cells which ensure CCP directives are met.
This dynamic creates an unofficial merged party-state entity or “one institution two nameplates” structure, where the CCP is obscured within state organizations. This provides cover for outside entities to unwittingly contribute to CCP goals.
In the case of CSTC and MOST, Australia entered into a science and technology partnership with MOST called the Australia-China Science and Research Fund Joint Research Centres, to “benefit Australia and China.” While this sounds friendly enough, this Joint Research Centre studies graphene technology, high-performance structures and composites, and energy storage, all things the CCP has identified as essential to military modernization.
In this case, the Australians have somehow convinced themselves they are working with the state, not the party. In reality they are funding a merged party-state entity, directly supporting the CCP’s goals.
In addition to this, in 2017, Xi Jinping established the Central Commission for Integrated Military and Civilian Development (CCIMCD), a CCP organ created to promote military-civil fusion and “improve China’s defense technology science and technology capacity and the PLA’s warfighting capability by integrating societal resources into the defense sector.”
The CCIMCD works with other CCP commissions to identify “bottleneck technologies” and then tasks state organizations to support domestic commercial development of these technologies through policy. These commercial technologies are then converted to military use.
One of CCIMCD’s subordinate state organizations is the Ministry of Industry and Information Technology (MIIT). Just after the CCIMCD’s formation, and in line with the CCP’s “Made in China 2025” industrial plan, the MIIT embarked on a program to cultivate “Little Giants” (小巨人), companies intended to develop Chinese dominance in critical supply chains. MIIT also has a program to support “Single Champions” (单项冠军), companies that have already established Chinese dominance in international supply chains.
In the majority of cases, both of these groups are “private” companies that are directly supported by state, and by proxy, CCP organizations. The remainder are outright state-owned enterprises like the Aviation Industry Corporation of China (AVIC), an aerospace and defense firm that manufactures advanced fighter aircraft like the J-20 (via CAC), J-35 (via SAC), and the new C919 narrowbody airliner (via COMAC).
From a strategic perspective, this hard push to integrate into global supply chains makes it more difficult for the US and Allies to decouple, giving the CCP more economic leverage and ensuring the PRC economy doesn’t go into sanctions free fall.
What Technologies the CCP Wants
Within the CCP there were leading small groups (LSGs) on specific technologies (like encrypted communications) which after 2018 were mostly rolled up into CCP commissions. Their focus on key technologies remains. In the 14th Five Year Plan, the CCP identified the following industries as critical to China’s economic (and military) modernization. This is not an all-encompassing list.
Next-generation artificial intelligence
Quantum information
Semiconductors
Photolithography Machines (EUV)
Semiconductor Etching Technology
Semiconductor Component Assembly Technology
Neurosciences
Genetic research and biotechnology
Advanced clinical medicine and healthcare
High-end medical equipment and innovative drugs
Deep-space, deep-earth, deep-sea and polar exploration
High-end new materials
Major technical equipment & machinery
Smart manufacturing and robotic technology
Aerospace engines and gas turbines
BeiDou (satellite navigation system) industrialization applications
New energy vehicles and intelligent vehicles
Modern agriculture
Agricultural mechanical equipment
Modern seed industry
Various CCP and state entities have expanded on these industries with their own priority lists. The Ministry of Education released a number of publications detailing 35 bottleneck technologies the CCP is actively trying to develop. In some cases the CCP has seen success, and in others they are still struggling. The most comprehensive English language analysis of CCP bottleneck technologies can be found here.
How the CCP Supports Technological Breakthroughs
The CCP, through its merged party-state organs, employs a “new-style whole-of-nation system” (新型举国体制) to advance military-civil fusion and develop bottleneck technologies by reducing fragmentation between industry, universities, public research institutes, and military research institutes.
This system promotes patent transfers, technology transfers, and personnel transfers between entities, while providing massive subsidies. An increasingly apparent example of this is the Commercial Aircraft Corporation of China (COMAC), their C919 narrowbody airliner, and more specifically, the CJ-1000A jet engine.
Commercial Aircraft Corporation of China (COMAC)
COMAC was established in 2008 with support from AVIC, the State-owned Assets Supervision and Administration Commission (SASAC), and numerous state-owned enterprises.
In the early 2010s, COMAC struggled to get their initial C909 (ARJ-21) regional jet project off the ground because of avionics and materials issues. To solve these issues and build a foundation for the C919 project, the CCP poured up to $72 billion in subsidies into COMAC and employed Chinese state security operatives to conduct corporate espionage and steal information on critical component technology.
According to a report from cybersecurity firm Crowdstrike and a US Justice Department indictment, from 2010 to 2015 the Chinese cyberthreat actor Turbine Panda, linked to the Ministry of State Security’s Jiangsu Bureau, penetrated a number of the C919's foreign components manufacturers including Ametek, Capstone Turbine, GE Aviation, Honeywell, Safran, and others and stole intellectual property and industrial processes data with the aim of transitioning component manufacturing to Chinese companies.
Since then, there have been numerous instances of Chinese intelligence officers targeting advanced turbine engine technology to support the CJ-1000A turbofan engine program, COMAC’s indigenous engine program for the C919 led by the Aero Engine Corporation of China (AECC), a subsidiary of COMAC and AVIC. AECC is developing the CJ-1000A engine as an alternative to the GE/Safran Leap-1C engines. PRC state security services are working to advance this goal.
These efforts have yielded some advances, but more importantly have resulted in technology transfers to AVIC and AECC design institutes like Shenyang Aero Engine Research Institute, the military institute responsible for designing the new engine for the Y-20, the PLA’s military strategic lift platform.
US Entities Unwittingly Support the CCP through COMAC & AUBO Robotics
FDH Aero, a US aerospace supply chain firm, entered into a strategic partnership with COMAC and Shanghai Aerospace Manufacturing Co. (SAMC). COMAC was identified by the DoD as a Chinese Military Company and SAMC is on the BIS Entity List as a Military End-User.
The University of Tennessee partnered with AUBO Robotics at UT’s Cherokee Farm Innovation Campus, a joint research project in collaboration with Oak Ridge National Laboratory (ORNL). The chairman of AUBO Robotics is Wei Hongxing (魏洪兴), a professor at Beijing Aerospace University (Beihang University). During his tenure, Wei has conducted research on drone swarms and robotics applications for NORINCO, China’s largest weapons manufacturer.

QUECTEL, ORIGINCELL, MGI TECH, NEED WE GO ON?
On Jan 2, 2025, the U.S. Department of Defense (DoD) updated the 1260H List of entities identified as “Chinese military companies” (CMCs) operating in the United States. In addition to COMAC and other SOEs like COSCO Shipping being added to the list, multiple Little Giants like Quectel (CN), Orgincell (CN), MGI Tech (CN) were also added. These “private” firms are whitelisted by MIIT and receive billions of RMB in subsidies to advance the goals of the CCP.
This same system is supercharged for Little Giants.
Since Little Giants and strategic high-tech small & medium sized enterprises (SMEs) receive direct support from the CCP and state entities, they are widely seen as stable investments, both politically and financially. From an investor piece on the Global X China Little Giant ETF (2815.HK):
“In the current volatile market environment, the performance of small and mid-cap stocks is particularly pronounced, especially for those companies supported by government policies and related to China's economic transformation, known as specialized, refined, unique, and innovative. When investors focus on small and mid-cap stocks, they should particularly consider the potential of Little Giants. As China's economic structure continues to transform and its industrial chain upgrades, these companies not only enhance their own innovation and profitability but also offer relatively substantial returns for investors.”
What Should Be Done?
Big Trouble with Little Giants: Sanction all Single Champions, Little Giants, and supporting SMEs. As we’ve established, firms that receive support from merged party-state organizations like MOST and MIIT function in direct support of the CCP. Considering the goals of the CCP, these firms, especially all Single Champions, Little Giants, and affiliated high-tech SMEs, should be sanctioned and added to the Department of Commerce BIS Entity List.
The Entity List is currently around 700 companies and would need to expand to encapsulate the few hundred Single Champions, roughly 15,000 Little Giants, and critical supporting SMEs. While this may seem like broad sweeping sanctions, this is just 16,000 out of nearly 58 million registered and operating corporations in China, less than 0.03%. This is a highly targeted effort to snuff out entities fueling advances in the PLA capabilities.
If necessary, these sanctions could expand to include all corporations located in national high-tech zones with dedicated military-civil fusion programs. This would include Zhongguancun High Tech Park (CN), which itself is home to over 9,000 designated high-tech enterprises generating revenues in excess of $600 billion, Tianjin Jingbin Industrial Park, Xi’an High tech Development Zone, Shanghai Zhangjiang Hi-Tech Park, etc. Non-Chinese firms would have to divest from these areas.
Reciprocal Trade: Remove China from the WTO and revoke Permanent Normal Trade Relations (PNTR) status. Currently, the WTO has no mechanism to remove members who violate WTO principles. Congress should pass Rep. John Moolenar’s (R-MI-2) “Restoring Trade Fairness Act” introduced in November 2024.
Considering China’s gross violations of WTO principles, there is no reason to maintain China’s PNTR status with the US and this should be suspended immediately. If China cannot be removed from the WTO, it must be identified as a bad faith actor and the US should pursue a reciprocal trade arrangement, banning access to every industry that US companies are restricted from accessing in China.
Conclusion
Entirely decoupling from China is unnecessary, but the United States and Allies must restrict cooperation on dual-use technologies that bolster PLA military capabilities and advance CCP geopolitical ambitions.