Pentagon adds Alibaba, Baidu, BYD to China military list in 1260H update

The Pentagon's updated Chinese military companies list now covers three of China's largest listed internet firms with a combined market value of roughly $850 billion.

The Pentagon on Monday added Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. to its list of companies it says support China's military, expanding the designation to some of the country's most valuable technology firms less than a month after President Donald Trump met Xi Jinping in Beijing.

"The administration is not treating the perception of summit success as a reason to stand down," said Craig Singleton, a China expert at the Foundation for Defense of Democracies in Washington. "It is using the post-summit window to sequence pressure."

The updated Section 1260H list, also known as the Chinese Military Companies list, added e-commerce giant Alibaba, search provider Baidu and electric-vehicle maker BYD alongside memory chipmakers CXMT and YMTC, biotech firm WuXi AppTec, robotics companies RoboSense Technology Co. and Unitree, and networking equipment maker TP-Link. The list now includes China's three largest listed internet firms — Alibaba, Baidu and Tencent Holdings Ltd. — with a combined market value of about $850 billion. WuXi AppTec shares fell as much as 5.9 percent in Hong Kong trading Tuesday to HKD114, while Alibaba dropped 1 percent.

The designation does not impose immediate sanctions, but under US law the Defense Department will be prohibited from contracting directly with listed companies starting later this month, and from buying their products or services through third parties beginning in 2027. The reputational damage can be severe: companies added to the list often face heightened scrutiny from US investors and policymakers, and several have later become targets of export controls and federal procurement bans.

The update supersedes a list from early 2025 and mirrors a version the Pentagon briefly posted in February before withdrawing it the same day without explanation, as Trump's Beijing trip was being prepared. The February version had removed CXMT and YMTC, drawing criticism from China hawks in Washington. Monday's list reinstated both chipmakers.

China's embassy in Washington condemned the move, saying Beijing opposed "making discriminatory lists to go after Chinese companies" and that its firms comply with local laws and regulations. WuXi AppTec said its inclusion was "clearly a mistake" and that it would take immediate action to correct the designation. Alibaba and Baidu said the accusations are baseless and they intend to seek removal.

The last major expansion of the 1260H list in January 2025 added Tencent, China's largest listed technology firm by market value. Tencent has said it intends to challenge its designation. Smartphone maker Xiaomi successfully sued to be removed from an earlier version of the list in 2021, establishing a legal pathway that other companies may now pursue.

Market and Sector Implications

The expanded list signals that Washington views China's entire technology ecosystem as strategically contested, rather than targeting individual companies. "Washington is no longer treating these as isolated companies. It is treating the entire technology stack as strategically contested," Singleton said. The designation also sends a warning to Pentagon suppliers and other US government agencies about doing business with the listed firms.

House China Select Committee Chair John Moolenaar said the updated list "is a warning to American businesses, all levels of government, and the American people. These Chinese companies are working with the Chinese military against our national interests."

Some companies were removed from the list, including two entities owned by state-owned China National Offshore Oil Corp. — CNOOC China Ltd. and CNOOC International Trading — though a CNOOC subsidiary, China BlueChemical Ltd., was added. Companies can be removed not because the US determines they lack military links, but because they no longer operate in the US or because an entity's name has changed.

The previous escalation of US restrictions on Chinese technology companies in 2022, when the Commerce Department added dozens of firms to the Entity List, triggered a 12 percent decline in the Hang Seng Tech Index over the following month while the offshore yuan weakened 2.3 percent against the dollar.

This article is for informational purposes only and does not constitute investment advice.