Key Points
- The Pentagon identified Alibaba, Baidu, and BYD as military-linked entities.
- Defense officials sent the warning letter before the recent trade truce. The 1260H list warns investors about ties to China’s army.
- Alibaba denied the claims, calling them a malicious political stunt.
- China threatened retaliation if the US continues targeting its companies.
The Pentagon has officially recommended adding Chinese tech giants Alibaba, Baidu, and electric vehicle maker BYD to a government watchlist. Defense officials believe these companies provide aid to the Chinese military. This recommendation appeared in a letter sent to Congress on October 7, just three weeks before President Donald Trump and President Xi Jinping signed a major trade truce.
Deputy Defense Secretary Stephen Feinberg wrote the letter to House and Senate leaders. He stated that, after reviewing the latest intelligence, the Department of Defense identified eight companies that fit the description of “Chinese military companies.” Aside from the big three names, the list includes lesser-known firms like RoboSense and drugmaker WuXi AppTec.
Placement on this roster, known formally as the 1260H list, serves as a serious warning label. While it does not immediately ban these companies from doing business in the US, it tells American investors that these firms have deep ties to Beijing’s armed forces. Being named often leads to stock market selloffs and reputational damage. For instance, when other companies joined the list in January, their stock prices took a heavy hit.
The timing creates a complex political situation. The Pentagon pushed for these additions right before Trump and Xi met in South Korea to lower tariffs and ease tensions. A recent White House memo even accused Alibaba of providing technology to target US interests, a claim Alibaba furiously denied. The company called the accusation a “malicious PR operation” meant to sabotage the president’s trade deal.
China’s Foreign Ministry responded with anger. They accused the US of using “national security” as an excuse to suppress successful Chinese businesses and promised to take necessary measures to protect their companies.
Currently, it is unclear if the Pentagon has formally finalized the list update. However, if these companies—many of which supply parts for American tech firms like Nvidia and Tesla—are officially blacklisted, it could complicate the fragile peace between the world’s two largest economies.
