The Pentagon has added several prominent Chinese companies, including Alibaba Group, Baidu Inc., and BYD, to its '1260H list' of entities believed to support the Chinese military.
This designation complicates the already delicate diplomatic relationship between the U.S. and China, as it prohibits the Defense Department from contracting with these companies starting later this month and from procuring their products or services through third parties by 2027.
Following the announcement, Baidu's American depositary receipts fell by 2.1%, while Alibaba and BYD saw declines of 0.8%. This move comes after a recent meeting between President Trump and Chinese leader Xi Jinping, where they had agreed on a trade truce.
The updated list reflects ongoing security concerns in Washington regarding Chinese technology as a strategic threat, particularly in light of the U.S. restrictions on semiconductors and AI hardware. The inclusion of companies like WuXi AppTec and others highlights the Pentagon's view that civilian technology firms in China are closely tied to military objectives.
WuXi AppTec has disputed its designation and plans to seek removal from the list, while Alibaba, Baidu, and BYD have not yet commented on the situation