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- The Pentagon added a slew of Chinese tech firms, including Alibaba and Baidu, to a list of entities it believes to have aided Chinese military.
- The Defense Department will be prohibited from contracting directly with listed companies starting later this month.
- The update underscores recurring tension in the bilateral relationship and security concerns in Washington over Chinese technology as a strategic threat.
A general view of the office building of Baidu is in Pudong, Shanghai, on Feb. 9, 2026. Ying Tang | Nurphoto | Getty Images
The Pentagon added a slew of Chinese companies, including Alibaba Group, Baidu Inc and carmaker BYD, to a list of entities it believes have aided the Chinese military, complicating the fragile diplomatic relationship between Washington and Beijing.
The Defense Department published an updated “1260H list” Monday evening stateside — a roster of companies the Pentagon considers affiliated with China’s military or defense industrial base.
The designations do not impose sanctions explicitly, but mean the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from procuring their products or services through third parties beginning in June 2027.
“These indirect restrictions could force some U.S. firms that work with the U.S. military to drop designated Chinese firms as suppliers,” said Michael Hirson, head of China Research at 22V Research.
Baidu’s American depositary receipts dropped 2.1%, Alibaba slumped 0.8% and BYD slid 0.8%.
The additions come after President Donald Trump met Chinese leader Xi Jinping in Beijing last month, where the two leaders agreed to a trade truce and announced a joint investment and trade board. The update underscores a recurring tension in the bilateral relationship and security concerns in Washington over Chinese technology as a strategic threat.
The Pentagon briefly posted a similar expanded list in February, then withdrew it without explanation as Trump’s China trip had been pending. The version released Monday largely mirrors that February update, but reinstates Chinese memory chipmakers CXMT and YMTC, which had been left off the withdrawn list — an omission that drew criticism from China hawks in Washington at the time.
Listed companies are deemed affiliated with China’s State-owned Assets Supervision and Administration Commission, and designated as “military-civil fusion” contributors to China’s defense industrial base through ties to the Ministry of Industry and Information Technology, according to the Defense Department notice.
The list also adds biotech giant WuXi AppTec, lidar maker RoboSense Technology and Unitree — a leading Chinese maker of humanoid robots. U.S. chipmaker Nvidia announced last week its plans to work with the company to develop robots for research use.
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The breadth of the additions reflects Washington’s view that civilian technology companies in China are inextricably linked to state military priorities, underscoring a concern that has driven restrictions on China’s semiconductors, artificial intelligence hardware and advanced manufacturing from Washington.
While the move is largely symbolic as they fall short of an investment or export blacklist, it shows how broadly Washington has drawn the line around sensitive Chinese technology, spanning consumer electronics, biotech and robotics, said Hirson.
Still, Hirson said he did not expect the U.S. Treasury or Commerce to add prominent Chinese tech firms to more formal restrictions this year, as Washington prioritizes keeping the bilateral ties on stable footing.
WuXi AppTec and Alibaba disputed the designation and pledged to seek their removal. Baidu and BYD didn’t respond to requests for comment.
“There’s no basis to conclude that Alibaba should be placed on the Section 1260H List. Alibaba is not a Chinese military company nor part of any military-civil fusion strategy. We will take all available legal action against attempts to misrepresent our company,” the company said in a statement to CNBC.
Some Chinese companies have sued the Pentagon to contest the listing, with Xiaomi winning a court challenge that resulted in its removal in May 2021.
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