The Pentagon on Monday added Alibaba Group, Baidu and electric-vehicle maker BYD to its 1260H list of Chinese companies the Defense Department considers tied to Beijing's military, expanding the roster to 188 entities from roughly 130 a year earlier and reopening a dispute that the Trump administration had paused while pursuing a trade truce with China.
The designation does not impose sanctions. It will bar the Defense Department from contracting directly with the named companies later this month and from procuring their products or services through third parties beginning in June 2027, according to CNBC's reading of the department's notice. Companies on the list face reputational damage and pressure on their U.S. listings, and several have sued in the past to win removal.
What's on the list
The update also names biotech contract-research firm WuXi AppTec, lidar maker RoboSense Technology, humanoid-robot maker Unitree and electric-vehicle maker NIO. It reinstates Chinese memory-chip producers CXMT and YMTC, which had been omitted from an expanded list the Pentagon briefly posted in February and then withdrew without explanation as President Trump's Beijing trip approached. China hawks in Washington criticized the February omission at the time.
The Pentagon said Alibaba, Baidu and BYD are affiliated with China's Ministry of Industry and Information Technology, which oversees Chinese technology and industrial policy, and that the listed companies contribute to Beijing's defense industrial base through a "military-civil fusion" strategy. The 1260H list was created in 2021 under a congressional mandate to flag firms with ties to the People's Liberation Army that are not traditionally defense contractors.
Market reaction
Baidu's American depositary receipts fell 2.1 percent after the announcement, CNBC reported. Alibaba shares dropped 0.8 percent and BYD slid 0.8 percent.
Alibaba, Baidu, BYD, WuXi AppTec and NIO disputed the designation and said they would seek removal. "Alibaba is not a Chinese military company nor part of any military-civil fusion strategy," the e-commerce company said in a statement to CNBC, pledging legal action. Baidu, which has expanded into artificial intelligence and self-driving taxis, called the suggestion "entirely baseless," CBS News reported. BYD told CBS News it is "not a military enterprise" and that the determination "seriously contradicts the facts."
The Chinese Embassy in Washington accused the United States of "overstretching the concept of national security and making discriminatory lists to go after Chinese companies," CBS News reported. A Chinese Foreign Ministry spokesperson said Tuesday that Beijing would take measures to protect Chinese firms' rights.
Trade truce complication
The additions land roughly a month after Trump met Chinese leader Xi Jinping in Beijing, where the two governments agreed to a trade truce and announced a joint investment and trade board. Michael Hirson, head of China research at 22V Research, told CNBC that the new restrictions are "largely symbolic" because they stop short of an investment or export blacklist, but added: "These indirect restrictions could force some U.S. firms that work with the U.S. military to drop designated Chinese firms as suppliers." Hirson said he did not expect the Treasury or Commerce departments to add prominent Chinese tech firms to more formal restrictions this year.
The House Select Committee on the Chinese Communist Party called the update "a warning to American businesses, all levels of government, and the American people," CBS News reported, and said publicly traded firms on the list should be delisted from U.S. exchanges. Alibaba and Baidu trade on the New York Stock Exchange and Nasdaq, respectively.
The counterpoint
The listed companies and Beijing reject the military-affiliation finding. Chinese robot maker Xiaomi sued the Pentagon over a previous designation and won removal in May 2021, a precedent the newly named firms have cited in their pledges to challenge the list. U.S. chipmaker Nvidia said last week it plans to work with Unitree, now on the list, to develop robots for research use.
The direct contracting ban on the listed firms takes effect later this month, according to the Defense Department notice. The broader indirect procurement restrictions begin in June 2027.