New Delhi: The Pentagon accused some of China’s biggest companies, including Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. of supporting the Chinese military, doubling down on an earlier decision to label crown jewels of the country’s corporate world as threats to US national security.
The Defense Department announced the designations Monday in an update to a roster of companies that it has determined aid the People’s Liberation Army. The companies were included in a previous version that was posted briefly in February before being withdrawn minutes later without any explanation, sowing confusion about the Pentagon’s intentions.
With the move, the US has now declared that three of China’s most prominent artificial intelligence champions — Alibaba, Baidu and Tencent Holdings Ltd. — are aiding the Asian country’s armed forces. Tencent was added to the list in 2025 and has been seeking its removal. The designation of BYD singles out China’s top electric-vehicle company.
Alibaba shares fell as much as 1.4% in Hong Kong trading on Tuesday, while Baidu pared earlier gains to trade 1.2% higher. The relatively muted response in Asian markets suggests investors have become accustomed to recurring regulatory broadsides from Washington.
“I believe it’s just geopolitical posturing. Fundamentally there’s limited impact to business operations for these companies,” said Nigel Peh, a portfolio manager at Timefolio Asset Management in Singapore.
The newest version of the Pentagon’s so-called 1260H list also restored two Chinese memory chipmakers — ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co. — that had been previously designated by the Defense Department but were removed from the version that briefly appeared in February. Other hardware manufacturers, including robotics developer Unitree Robotics — rendered as Hangzhou Yushu Technology Co., Ltd. on the list — were also swept into the expanded roster.
While the list carries few immediate legal repercussions, the Pentagon is increasingly using it to restrict companies’ abilities to contract with the American military or to receive research funding. A 1260H designation also serves as a warning to US investors, and is widely considered a red flag that can precede more punitive trade restrictions.
Despite the limited immediate commercial impact, some of the designated companies issued sharp rebuttals.
“Alibaba is not a Chinese military company nor part of any military-civil fusion strategy,” the firm said said in an emailed statement to Bloomberg. “We will take all available legal action against attempts to misrepresent our company.”
Baidu similarly rejected the Pentagon’s assessment, vowing in a statement to “use all options available” to have the company removed from the list. BYD opposed the designation and vowed to safeguard its interests “through all feasible administrative and legal means.” Unitree didn’t immediately respond to requests for comment.
The list was released less than a month after President Donald Trump met with his Chinese counterpart Xi Jinping in Beijing, where the two leaders discussed some of the sticking points on trade between the world’s two largest economies. Their closely watched summit failed to yield a significant easing in tensions over advanced technology, especially AI.
“The Pentagon’s republished Chinese military companies list serves as a post-summit reality check,” said Craig Singleton, senior China fellow at the Foundation for Defense of Democracies. “The Xi-Trump meeting did not pause competition; it clarified where competition will continue,” added Singleton, who tracks the 1260H designations closely.
The Chinese Foreign Ministry criticized the move, accusing the US of overreaching on security matters to disadvantage Chinese commercial entities.
“We urge the US to correct its wrongdoings and stop its groundless suppression of Chinese companies,” ministry spokesman Lin Jian said in a regular briefing in Beijing on Tuesday. “China will take necessary measures to firmly safeguard the legitimate and lawful rights and interests of Chinese enterprises.”
Also named on the list was WuXi AppTec Co., a pharmaceutical contractor that has performed various services for many of the world’s largest pharmaceutical companies. As of 2024, WuXi was producing much of the active base ingredient used in Eli Lilly & Co.’s obesity drug Zepbound, Bloomberg has reported. The listing could threaten its business and risks complicating research being done by American drugmakers.
WuXi AppTec called its inclusion on the Pentagon’s list a mistake. “We do not meet the statutory criteria for designation as a ‘Chinese military company,’” the company said in an emailed statement to Bloomberg, adding that WuXi AppTec isn’t controlled or affiliated with any Chinese military or government entity.
In releasing its updated list, the Pentagon said the named entities qualify as “Chinese military companies” operating directly or indirectly in the US based on their alleged activities “providing commercial services, manufacturing, producing, or exporting.”
Bloomberg News reported in May that the Pentagon’s initial decision to remove YMTC and CXMT was the reason the list was quickly withdrawn in February. Trump national security officials thought that removing the chipmakers — especially before a planned meeting between the US and Chinese leaders set at the time for late March — would incorrectly suggest that the US no longer considered them a threat, according to people familiar with the matter.
Officials also feared the move would strengthen the Chinese companies at the expense of Micron and two other major memory players from US ally South Korea: Samsung Electronics Co. and SK Hynix Inc., according to the people.
Immediately after the list’s publication, a senior White House official called the Pentagon to express displeasure that their concerns had been ignored, Bloomberg reported. Defense officials raced to get the list taken down just minutes after it had been posted.
The snafu gave companies a monthslong opportunity to press for further changes via a mix of lobbying and legal strategies. In the end, the version published in June was substantially similar to the version published in February and then withdrawn — except for the reinstatement of the two chipmakers.
Congress first ordered the Defense Department to make a list of Chinese military companies operating in the US in 1999. The Pentagon finally began doing so more than two decades later, after lawmakers and the first Trump administration revived the issue.
Due to China’s “military-civil fusion” policy, under which Beijing mandates private-sector collaboration with the country’s armed forces, the Pentagon could theoretically justify designating almost any Chinese company with a US presence.
The version that was briefly published in February and essentially republished Monday is among the most significant updates in the list’s history, targeting nearly 200 companies — many of them among China’s most prominent.
John McEntee, a former senior Trump White House official who lobbies for Tencent, criticized the company’s continued inclusion on the list.
“By expanding the list to Chinese car companies like BYD and NIO, they’re revealing how ridiculous the justification is. By their logic, Ford and GM should be classified as American military companies,” he said.
One remaining point of confusion emerging from the newest update is the addition of China-based TP-Link Technologies Co. Ltd. — which is focused on selling products to customers in China — rather than US-headquartered TP-Link Systems Inc., which has come under US scrutiny for the possible national security risks posed by its dominance in the market for wireless routers.
To be added to the list, a company must operate directly or indirectly in the US.
“As a US-based company incorporated in California, TP-Link Systems Inc. is not subject to this posting or its associated restrictions,” said a company spokeswoman. She added that TP-Link’s founder and CEO, Jeffrey Chao, lives in California “and is not and never has been a member” of the Chinese Communist Party.
–With assistance from John Harney, Tony Capaccio, Lynn Doan, Gerry Smith, Zheping Huang, Debby Wu, Jeanny Yu, Charlotte Yang, Alan Wong, Chunying Zhang and Jason Rogers.
This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.
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