Pentagon Labels Alibaba, Baidu, and BYD as Chinese Military-Linked Companies

TLDR

• The Pentagon updated its “1260H list,” adding Alibaba, Baidu, BYD, WuXi AppTec, and others as Chinese military-linked companies
• The Defense Department will be barred from contracting with listed firms starting later this month
• Baidu ADRs dropped 2.1%, Alibaba fell 0.8%, and BYD slid 0.8% on the news
• All three major companies rejected the designations and vowed legal action
• The list was released less than a month after Trump and Xi met in Beijing for trade talks

The Pentagon updated its list of Chinese military-linked companies on Monday, adding major firms including Alibaba, Baidu, BYD, and WuXi AppTec. The list is known as the “1260H list.”

The designations do not impose sanctions directly. However, the Defense Department will be banned from contracting with these companies starting later this month. Indirect procurement restrictions through third parties will follow in June 2027.

Baidu’s American depositary receipts dropped 2.1% on the news. Alibaba fell 0.8% and BYD slid 0.8%. The response in Asian markets was more muted, with some investors suggesting they have grown used to this type of action from Washington.

Alibaba Group Holding Limited, BABA

What the List Means for Companies

The 1260H designation carries few immediate legal consequences. But it restricts a company’s ability to work with the U.S. military or receive research funding. It is also seen as a warning sign that can come before tougher trade restrictions.

The list also names WuXi AppTec, a major pharmaceutical contractor. As of 2024, WuXi was producing much of the active ingredient in Eli Lilly’s obesity drug Zepbound. Its inclusion could affect American drugmakers that rely on its services.

Robotics firm Unitree was also added. Nvidia announced last week it plans to work with Unitree to develop robots for research use.

Timing Raises Questions

The list was released less than a month after President Trump met Chinese leader Xi Jinping in Beijing. The two leaders agreed to a trade truce and announced a joint investment board during that meeting.

A Pentagon version of the list was briefly published in February, then pulled without explanation. That version had removed Chinese memory chipmakers CXMT and YMTC, a move that drew criticism. The June update reinstated both companies.

China’s Foreign Ministry condemned the move, saying the U.S. was using national security as cover to target Chinese businesses. The ministry said China would take “necessary measures” to protect its companies.

Electric vehicle maker NIO, also added to the list, said the restrictions would not affect its business. Some companies, like Xiaomi, have successfully challenged their inclusion in court before.

The updated list covers nearly 200 companies and is one of the largest expansions in the list’s history.

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