Pentagon adds Alibaba, Baidu and BYD to list of firms with alleged Chinese military ties

The Pentagon has designated dozens of Chinese companies, including Alibaba, BYD, Baidu, Unitree, Huawei, and CXMT, as entities with alleged links to the Chinese military.

The move signals an intensifying effort by Washington to broaden the definition of “dual-use technologies” amid heightened national security concerns.

In an updated Section 1260H list released Monday evening, the US Department of Defense (DoD) asserted that these Chinese corporations were found to be supporting the modernization and strengthening of the People’s Liberation Army, despite operating directly or indirectly within the US.

The newly listed entities represent a wide spectrum of technological sectors, including artificial intelligence, semiconductors, autonomous systems, unmanned aerial vehicles, robotics, and battery technology.

A previous version of the list had been briefly published in February before being withdrawn, after it was discovered that memory chip manufacturers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies (YMTC) had been mistakenly omitted.

The term “dual-use” refers to technologies that have both civilian and military applications.

While inclusion on the 1260H list does not trigger automatic sanctions, it can result in restrictions on US government procurement, trigger investment reviews, and pose significant reputational or regulatory risks for the affected companies.

Major Chinese firms, including Tencent and CATL, were added to the same 1260H list in January 2025.

Following the latest announcement, American depositary receipts for both Baidu and Alibaba saw slight declines in New York trading, while their shares in Hong Kong remained largely flat on Tuesday.

Winston Ma, an adjunct associate professor at NYU School of Law, told Nikkei Asia that the inclusion of companies like Alibaba, Baidu, BYD, Tencent, and Xiaomi indicates a major expansion of what is considered strategic technology through a national security lens.

Ma noted that the updated Pentagon list aligns with earlier moves by the Committee on Foreign Investment in the United States (CFIUS) to broaden its scope for reviewing commercial mergers and acquisitions.

That expansion, which occurred in early 2025, was aimed at restricting investments from geopolitical rivals, specifically China.

“Both developments reflect a broader reality: the boundary between commercial technology and national security is becoming increasingly blurred,” Ma said.

The updated list was released less than a month after President Donald Trump met with President Xi Jinping in Beijing.

The two leaders secured a fragile ceasefire in the ongoing trade war, leading some analysts to speculate that the administration may have delayed the list’s release until after the summit.

Alibaba and other companies named in the update have pledged to challenge their inclusion.

“There is no basis for concluding that Alibaba should be included on the 1260H List,” an Alibaba spokesperson said. “Alibaba is not a Chinese military company and is not part of any military-civil fusion strategy. We will pursue all legal avenues to contest attempts to mischaracterize our company.”

Baidu also contested its inclusion in a statement to Nikkei Asia. “There is no credible justification for Baidu’s addition to the list. The claim that Baidu is a military company is entirely without merit. We will not hesitate to use all available options to seek the company’s removal from the list,” a Baidu spokesperson stated.

Since Trump returned to power in January 2025, the US has significantly expanded restrictions on Chinese companies through various blacklists and regulatory frameworks, targeting a wider range of sectors even as China’s AI and biotechnology firms continue to advance.

In contrast to the Pentagon’s list, the Bureau of Industry and Security’s (BIS) Entity List carries more immediate consequences by restricting a company’s access to US technology and mandating export licenses.

According to a report by the Center for a New American Security, 95 Chinese entities were added to the Entity List last year, approximately two-thirds of which were linked to China’s military modernization.

Last year, the BIS expanded export controls by introducing the “Affiliated Entities Rule,” which extended licensing restrictions to non-listed foreign affiliates where blacklisted entities hold a 50% or greater stake.

However, the enforcement of that rule is currently suspended.