US Secretary of Defense Bans, China Removed by Microsoft in 24 Hours; Canada Expels Chinese Firms

0:00 On July 18th, 2025, US Secretary of Defense Pete Hegsath ordered a review of the Pentagon's cloud computing contracts. He also demanded that Microsoft stop using Chinese engineers to support US military projects. The change was to take effect within 24 hours. This decision came after an investigative report by ProPublica. It revealed that Microsoft had employed engineers based in China to help develop cloud systems for the US military. According to the reports, these engineers worked under the supervision of so-called digital sentinels, security cleared subcontractors tasked with monitoring sensitive work. Still, the involvement of engineers in China raised major concerns, especially because the projects involved military secrets. The report caught the attention of US Senator Tom Cotton. He pushed Secretary Hegse to launch a two-week review of the

0:46 Pentagon's cloud contracts. Earlier the same day, Cotton wrote a letter to the secretary asking the military to provide a list of all contractors using Chinese employees. He also asked for details on how digital sentinels are trained to detect suspicious activity. In his letter, Cotton wrote that the US government understands China's cyber capabilities to be among the most aggressive and dangerous threats facing the country today. He pointed to evidence of Chinese infiltration into critical infrastructure, telecom systems, and supply chains. Cotton warned that the US military must guard against every possible threat in supply chain, including threats coming from subcontractors. Microsoft spokesperson Frank Shaw responded on social media. He said the company has changed how it supports US government clients and that Chinese engineering teams will no longer provide technical support for the

1:32 Pentagon services. On the same day, Secretary Hexath posted a video confirming the launch of the two-week review. The goal is to make sure no engineers in China are involved in any other cloud service contracts for the Department of Defense. In his video, he said the department will keep monitoring and responding to any threats to the military infrastructure and networks. Seth emphasized that no foreign engineer, including those from China, should ever be allowed to maintain or access Department of Defense systems. This episode highlights the ongoing decoupling between the US and China in key tech sectors like cloud computing, artificial intelligence, and semiconductors. The concern isn't about one specific leak. It reflects a broader long-standing weariness in the US over Chinese involvement in sensitive defense related work. Earlier this year in

2:17 January, the US Department of Defense placed several Chinese companies including Tencent, Sensime, and CL on its Chinese military companies list. The Pentagon found them to be linked to China's military and banned any business with them starting in June 2026. The US Department of Defense in compliance with the law reported to Congress the list of Chinese military related companies and urged American businesses to avoid dealing with them. The US government is wary of China's military civil fusion which applies cuttingedge civilian technologies to the military driving technological development. The US believes it is necessary to identify companies linked to the military sector and limit their interaction with US businesses. The US accuses these companies of providing technological support to China's military in areas such as artificial intelligence and

3:04 battery technology which pose a national security threat. Tencent and CL have denied the allegations, asserting there are commercial entities with no ties to the military. In recent years, the US has used entities lists, executive orders, legislation, and diplomatic measures to expel or restrict multiple Chinese companies such as Huawei, Tik Tok, Hickvision, and Tencent. These actions are primarily based on concerns about national security, data privacy, and human rights. Additionally, starting in January 2025, the US government has implemented regulatory measures to limit American businesses and citizens from investing in China in fields such as semiconductors, artificial intelligence, and quantum computing. This aims to prevent advanced technologies which could be used for military purposes from

3:50 flowing into China through civilian investments. It's noteworthy that Canada also faced risks from China's influence in politics, economy, and technology, especially in telecommunications, minerals, and data. In 2017, the Canadian government approved the sale of two companies to Chinese firms. They were involved in sensitive technologies like satellites, and lasers. The sales sparked concerns among US lawmakers. The United States urged Ottawa to remain vigilant on national security issues involving China. As a US ally, Canada is under pressure to align its China policy with the US. In recent years, Canada has expelled several Chinese companies, citing national security concerns. Way high shipyard. In June 2025, British Columbia's state-owned ferry operator BC Fairies announced that after a rigorous

4:36 global procurement process, it had selected the China merchants industry Wayhigh Shipyard to build four new vessels. This decision sparked widespread concern in Canada about potential national security risks. Wayhai Shipyard is a subsidiary of China Merchants Group, a state-owned enterprise in China that claims to be directly managed by the central government. The deal was met with strong opposition from federal and provincial officials who argued that it would not only harm the development of Canada's domestic ship building industry, but also posed potential security risks due to the involvement of a Chinese company. Federal Transport Minister Christia Freeland expressed concern about the deal, highlighting the risks associated with working with Chinese companies, including cyber security threats. On June 16th, she sent a letter to the BC Minister of Transportation, requesting

5:21 clarification on the measures BC fairies would take to mitigate national security risks. Christian Luprret, a professor at the Royal Military College, warned that the ships made in China might contain back doors that could compromise the safety of critical infrastructure in British Columbia, such as the ferry routes to Victoria. Harman Bangu, the conservative MLA for transportation in British Columbia, also raised alarms about hiring a company directly connected to the Chinese Communist Party. He stated, "We're funding their stateowned shipyard that is directly related to the People's Liberation Army. We're literally funding the communist army. With a lot of the technology that will be on the vessels, the hard drives and everything, who gets to keep that data? That's a huge concern. Canada's concerns about working with the Chinese companies, especially state-owned ones like China Merchants Group, reflect

6:06 growing apprehension in both Canada and the US, over potential Chinese infiltration. Both situations involve collaboration with Chinese entities in sensitive areas, raising national security concerns. The United States worries about Chinese engineers potentially leaking secrets of US military cloud services, while Canada fears that a Chinese shipyard could install surveillance devices in its fairies. Recently, Ottawa decided to shut down the Canadian operations of the Chinese surveillance camera company Hickvision, citing national security concerns. This move is the latest in a series of actions by the federal government aimed at preventing potential threats from companies linked to the CCP. Hickvision, due to its close ties with the CCP, is considered a privacy and security risk, having already faced sanctions in countries such as the US, the UK, and

6:53 Australia. On June 27th, Canadian Minister of Innovation, Science, and Industry, Melanie Jolie, publicly announced on social media that the government had invoked the Investment Canada Act, demanding that Hickvision's Canadian subsidiary cease operations within 120 days. The government also prohibited its products from being purchased by government agencies and initiated a review of existing facilities. Jolie stated that the decision was based on national security considerations. In response, Hickvision denied the government's accusations, stating that there was no evidence to support the claims and that its products complied with all applicable Canadian laws and regulations. The company has filed for judicial review of the order. Notably, some of Pigvision's shares are held by the CCP. In fact, as early as

7:38 2020, the US Department of Defense listed Hickvision as a company with ties to the Chinese military, a claim that Hickvision denied. In 2022, the US Federal Communications Commission banned the import and sale of Hickvision and other Chinese companies equipment, stating unacceptable risks to US national or citizen security. Canada's ban on Hickvision reflects a tougher stance on national security issues, aligning more closely with the US position. This move follows similar strategies seen with previous US actions against Chinese companies like Tik Tok, Huawei, and ZTE. Tik Tok. In November 2024, the Canadian government ordered the Chinese social media platform Tik Tok to shut down its office in Canada. Minister of Innovation Science and Industry Franis Phipe Champagne stated

8:23 that the decision was based on the results of a multi-stage national security review. On November 6, 2024, Champagne further clarified that the decision was based on intelligence and evidence collected during the review, as well as recommendations from Canada's security intelligence agencies and other government departments. Tik Tok has challenged this order in court. In 2023, the Canadian government banned the use of Tik Tok on government devices, citing unacceptable risks to privacy and security. The Canadian government pointed out that Tik Tok's data collection methods could extensively access mobile content, posing a risk to government information security. In a statement in 2024, Champagne made it clear that the government would not prohibit the general public from using Tik Tok, leaving it to individual Canadians. However, he urged Tik Tok users to exercise caution, warning that

9:10 personal information could be accessed by foreign entities. In 2022, former FBI director Christopher Ray had also warned about the national security risks posed by Tik Tok. He stated, "The risks include the Chinese Communist Party potentially using Tik Tok to control the data collection of millions of users manipulating its recommendation algorithm to influence operations or harm personal devices. Huawei and ZTE. The Five Eyes partners, including the United States, the United Kingdom, Australia, and New Zealand, have gradually banned Huawei from participating in their 5G network infrastructure since 2019, reflecting a shared Western stance on 5G security. The Five Eyes Alliance suspects Huawei of engaging in illegal data collection and industrial espionage, as well as having close ties with the Chinese military. In 2021, a report from

9:57 France's Minister of Armed Forces further accused Huawei of playing a key role in China's strategy to infiltrate the West. Although Huawei's founder, Ren Jang Fe, denied these accusations. However, Canada did not follow suit at the time. The then US Secretary of State Mike Pompeo warned that if allies allowed Huawei to participate in critical infrastructure, the US might halt intelligence sharing with them. In May 2022, then Canadian Minister of Public Safety Marco Mendescino finally announced a ban on Chinese telecom companies Huawei and Zelte. The two companies were banned from participating in Canada's 5G wireless network infrastructure. The government stated that the decision was based on a national security review and cited serious concerns that both companies could follow directives from the Chinese

10:42 Communist Party. As China adopted a more aggressive global stance and reports of its interference in western affairs grew, Ottawa progressively increased restrictions on Chinese entities operating in the country. In December 2018, Huawei's chief financial officer Muan Joe was arrested in Vancouver, leading to tensions in Canada China relations. In response, China detained two Canadian citizens, Michael Spavor and Michael Kovig. This incident was seen as a retaliatory move. In September 2021, after Mong Wanjo's release, the two Canadians were also freed. This incident further heightened Canada's suspicion of Huawei. ZTE has also been accused of having close ties to the CCP. In 2018, the US imposed heavy penalties on ZTE for violating sanctions against Iran. Canada's ban aligns with the US

11:29 stance on the matter. Existing Huawei NZTE equipment was required to be removed from the 5G network by June 28th, 2024, and 4G network equipment must be removed by December 31st, 2027. Canadian telecom companies that had previous used Huawei equipment will bear the cost of replacing the equipment. Chinese companies ordered to divest from critical minerals. In November 2022, the Canadian federal government ordered three Chinese companies to sell their stake in key mining companies in Canada, citing national security risks. The companies involved were one Cyomine which was instructed to divest from Vancouver's power metals corp. This company was involved in the exploration and development of Cessium Lithium and Tantela Metals in Canada. Two, Chungja Lithium International, which was ordered

12:15 to sell its shares in Calgary's Lithium Chile Inc. which operates mining businesses in Chile and Argentina. Three, Zanga Mining Company, which was required to divest from Vancouver's Ultraiththium Inc., a company with lithium and gold mining projects in Canada, Argentina, and the US. In 2020, China Shandong Gold Mining was blocked from acquiring the Canadian gold mining company T-Mac Resources, Inc. Minister of Innovation, Science, and Industry Francois Phipe Champagne emphasized that while Canada welcomes foreign direct investment, it will take decisive action when investments threaten national security or the supply chain of critical minerals. Under the Investment Canada Act, all foreign investments are subject to national security reviews with investments in critical minerals like lithium facing enhanced scrutiny. At the

13:01 time, China was actively seeking to dominate the supply of key minerals and metals. Resources like lithium and tantelum are crucial for manufacturing products such as wind turbines, electric vehicles, laptops, solar panels, and rechargeable batteries. In 2022, Canada released its critical mineral strategy, which restricts foreign state-owned enterprises from participating in sectors involving critical minerals like lithium. This reflects global concerns about the security of the new energy supply chain. Ensuring the supply of critical minerals was one of the key focuses at the 2024 G7 summit in Canada, where an action plan was announced to protect supply chains and counter non-market policies and practices. Canada's restrictions on Chinese investment are not limited to critical minerals. In 2018, the federal government blocked the sale of Canadian

13:47 construction company Acon Group, Inc. to a Chinese state-owned construction firm, citing multi-stage national security review and consultations with security agencies, though specific details were not disclosed. In 2021, a report from the Canadian Parliament highlighted that national security risks related to foreign investments in Canada often involved China. The report referenced testimony from Charles Burton, a senior fellow at the McDonald Laurier Institute. He stated that Chinese companies often collaborate with CCP military and intelligence agencies to advance Beijing's objectives. Burton noted that under the Investment Canada Act, all Chinese companies are considered stateowned due to their close ties with the CCP. Additionally, Canada's focus on national security has extended to the education sector. In February 2023, the federal government

14:32 announced the termination of funding for specific research projects involving researchers from universities, research institutions, or laboratories connected to foreign military, defense, or intelligence agencies that pose threat to Canada's national security. Reports had indicated that researchers from approximately 50 Canadian universities had been collaborating with China's top military institutions. They were doing research in fields like quantum cryptography, photonics, and space science. [Music]