Pentagon suggests adding Alibaba, Baidu, BYD to list for aiding China military

The Pentagon is seen from the air in Washington, D.C

The Pentagon concluded that Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. should be added to a list of companies that aid the Chinese military, according to a letter to Congress sent roughly three weeks before Donald Trump and Xi Jinping agreed to a broad trade truce.

Deputy Defense Secretary Stephen Feinberg informed lawmakers of the conclusion in the Oct. 7 letter, a copy of which was seen by Bloomberg News, to the heads of the House and Senate Armed Services Committees.

It wasn’t clear whether the companies have been formally included in the the Pentagon’s so-called 1260H list, which carries no direct legal repercussions but serves as a major warning to US investors.

Feinberg said the three companies along with five others — Eoptolink Technology Inc., Hua Hong Semiconductor Ltd., RoboSense Technology Co., WuXi AppTec Co. and Zhongji Innolight Co. — merit inclusion on the 1260H list, , which identifies businesses connected to the Chinese military operating in the US. The list is published annually, and the most recent version, which was updated in January before Trump took office, doesn’t include them.

“In our review of the latest information available, the Department has identified eight entities that it has determined are ‘Chinese military companies’ in accordance with the statute that should be added to the 1260H list,” Feinberg wrote in the letter.

The letter was written prior to the Oct. 30 summit between Trump and Xi in South Korea, where they agreed to a package of measures including lower tariffs and commitments to pause certain export controls. A spokesperson for the Pentagon didn’t respond to a request for comment.

In a statement, China’s Foreign Ministry said it has “consistently opposed the US practice of overbroadly defining national security, establishing discriminatory lists under various pretexts, and unjustifiably suppressing Chinese enterprises.”

“We urge the US to immediately correct its erroneous actions, and will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises,” the ministry added.

Representatives of all the Chinese companies named in the letter didn’t immediately respond to requests for comment.

The inclusion of several prominent Chinese firms on the list in January triggered a stock selloff that hit Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Ltd., which makes batteries for Elon Musk’s Tesla Inc. as well as other automakers. Inclusion on the list could amount to a serious challenge for Alibaba, which is stepping up efforts to compete globally in artificial intelligence, as well as the other firms.

Earlier this month, a White House memo first reported by the Financial Times said Alibaba had provided the Chinese military with technology support against targets in the US. The company rejected the claims, calling them “completely false” and a “malicious PR operation” designed “to undermine President Trump’s recent trade deal with China.”

Both Innolight and Eoptolink are leading makers of optical transceivers essential for connecting AI chips in clusters, and have been identified by Nvidia Corp. as its ecosystem partners. RoboSense provides sensors widely used in autonomous driving and robotics, is also named by Nvidia as a partner of the US firm’s autonomous driving platform.

The list, first published in 2021, now includes more than 130 entities accused of working with the Chinese military. The names include those of airlines, construction companies, shipping companies, computer hardware manufacturers and communications companies.

An analysis by the law firm of Hogan and Lovells said inclusion on the 1260H List has “several direct and indirect implications,” including restrictions on US defense contracts, potential inclusion on other restricted party lists, reputational damage and increased compliance costs.