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The Pentagon has added Alibaba, BYD, Baidu, and other major Chinese firms to its "Chinese military companies" list. Beijing has retaliated with export bans and procurement restrictions on dozens of US companies.
US Pentagon List Expansion
The US Department of Defense has published an updated list of companies designated as "Chinese military companies" under Section 1260H of the National Defence Authorisation Act. The list now contains 188 entities, up from roughly 130 to 134 in the 2025 version, according to a Federal Register notice.
Newly Added Companies:
- E-commerce & AI: Alibaba, Baidu
- Electric Vehicles/Batteries: BYD, Nio, CALB, EVE Energy
- Biotech: WuXi AppTec
- Robotics: Unitree
- Networking: TP-Link
- Solar: JA Solar, Trina Solar
- Lidar: Hesai, RoboSense
- Displays: BOE Technology Group
Definition and Criteria:
The Pentagon defines these entities as companies owned or controlled by the Chinese military, or that contribute to China's "military civil fusion" strategy. The listed companies meet statutory criteria based on alleged affiliations with the People's Liberation Army, state entities, or government industrial initiatives like the Ministry of Industry and Information Technology.
Legal Implications:
Designation on the list does not automatically trigger sanctions. However, it prohibits listed companies and their controlled entities from receiving US defense contracts. Under US law, the Defense Department will be prohibited from contracting directly with these companies and from buying their products through third parties, with some restrictions effective from late June 2025 and others from 2027.
Reactions to the US List
Chinese Government:
- The Chinese Ministry of Commerce stated it is "strongly dissatisfied and firmly opposes" the move, accusing the US of overstretching the concept of national security and making discriminatory lists. It warned that Beijing will "inevitably retaliate resolutely and forcefully."
- The Chinese Embassy in Washington called the listing "discriminatory."
- The Commerce Ministry stated the Pentagon's move "ignored the consensus" reached between US President Donald Trump and Chinese leader Xi Jinping during their meeting in May.
Affected Companies:
- Alibaba stated it is not a Chinese military company, calling the inclusion baseless. It announced it will take legal action.
- Baidu called the suggestion that it is a military company "entirely baseless."
- BYD and Unitree did not respond to requests for comment.
US Officials:
- Congressman John Moolenaar, chair of the House Select Committee on the Chinese Communist Party, called the list a warning and urged the delisting of affected publicly traded companies from US exchanges and their removal from US supply chains.
Analysts and Experts:
- Dennis Wilder, former CIA and National Security Council official, expressed skepticism about the list's effectiveness. He noted it may be too broad, and that many US firms have deep relationships with listed entities that they will not abandon without real penalties.
China's Retaliatory Measures
On Monday, China's Ministry of Commerce announced an export ban on dual-use items to 10 US companies, citing the need to safeguard national security in response to the Pentagon's "wrongful expansion."
Sanctioned US Companies (Export Ban):
- AVEOX (California)
- Red Cat Holdings and Teal Drones (Utah)
- IMSAR (Utah)
- Jaia Robotics (Rhode Island)
- Ball Aerospace & Technologies (Colorado)
- Oshkosh Defense (Wisconsin)
- L3Harris Maritime Services (Virginia)
- MP Materials (Nevada)
- USA Rare Earth (Oklahoma)
Separately, China's Finance Ministry prohibited government entities from buying products from 46 American companies, including units of Lockheed Martin, Raytheon, and General Dynamics.
Legal Challenge by Alibaba
Alibaba has filed a lawsuit against the US Department of Defense in a California federal court. The company argues that its designation is arbitrary and lacks factual or legal basis. The lawsuit states that Alibaba is not a Chinese military company nor part of any military-civil fusion strategy. The US Department of Defense declined to comment on the litigation.
Market Reaction
Following the publication and subsequent withdrawal of the list (which was declared "unpublished" in the Federal Register without explanation), stocks of affected Chinese companies experienced declines:
- Alibaba Group Holding Ltd.'s stock declined over 3% in Hong Kong.
- BYD Co. and Baidu Inc. recorded drops of approximately 1%.
- The agency also removed ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co. from the list.
Context
The updated list was published following a summit between US President Donald Trump and Chinese leader Xi Jinping aimed at easing trade tensions. The list was created in 2021 by a congressional mandate to identify Chinese companies with links to the Chinese military. Analysts noted that while the measures are unlikely to significantly derail bilateral relations, they warned of potential impact from further escalation.
In short: The Pentagon's broadened list marks an escalation in tech and defense tensions, met with immediate and reciprocal sanctions from Beijing.