Pentagon Targets Alibaba, Baidu, BYD for Chinese Military Companies List

TLDR

• Pentagon determined Alibaba, Baidu, and BYD should join its 1260H list of Chinese firms with alleged military connections in October 2025
• Deputy Defense Secretary notified Congress on October 7, weeks before US-China trade agreement between Trump and Xi Jinping
• Hong Kong stocks dropped after Bloomberg report, with Alibaba falling 2.2% and Baidu and BYD each down 1%
• Alibaba rejected claims of military ties and said listing wouldn’t impact US or global business operations
• Eight total Chinese companies under consideration for Pentagon’s military-linked firms list

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The US Defense Department concluded three prominent Chinese companies belong on its list of military-linked firms. Alibaba, Baidu, and BYD face potential inclusion on the Pentagon’s 1260H designation.

Deputy Defense Secretary Stephen Feinberg notified Congress about the determination on October 7. The letter came three weeks before Presidents Donald Trump and Xi Jinping agreed to a comprehensive trade deal.

The 1260H list identifies Chinese companies with suspected military connections that conduct business in America. Placement on this roster serves as a warning to US businesses and government entities.

Reports about the potential listing sent stocks lower in Hong Kong. Alibaba shares dropped 2.2% while Baidu and BYD each declined approximately 1% during Thursday trading.

Alibaba Group Holding Limited, BABA

What Pentagon Military List Means for Companies

The Section 1260H designation doesn’t impose immediate business restrictions. Companies can continue normal operations after placement on the list.

However, the label damages corporate reputations and signals risks to American firms. US entities may choose to limit or end business relationships with designated companies.

The Pentagon currently lists 134 Chinese companies on its military designation roster. Tencent Holdings and battery manufacturer CATL appear on the January 2025 update.

Bloomberg News reported eight companies total face consideration for the next list update. Five additional firms join Alibaba, Baidu, and BYD under Pentagon review.

These companies include Eoptolink Technology, Hua Hong Semiconductor, RoboSense Technology, WuXi AppTec, and Zhongji Innolight. The Pentagon hasn’t confirmed which firms have been officially added.

Alibaba Disputes Pentagon Military Designation

Alibaba issued a statement rejecting the Pentagon’s assessment. The company said no basis exists for Section 1260H list placement.

The e-commerce giant clarified it operates independently from China’s military. Alibaba stated it doesn’t participate in any military-civil fusion programs.

Company representatives emphasized the designation wouldn’t affect business capabilities. Alibaba maintains it conducts no activities related to US military procurement.

The firm can continue all business operations in the United States and internationally. This remains true regardless of official list placement according to company statements.

Baidu and BYD haven’t responded to media requests for comment. The Pentagon also declined to provide additional information about the potential designations.

Timeline of Pentagon Decision Process

The Pentagon review process began before the October notification to lawmakers. Defense officials spent months evaluating company connections to Chinese military operations.

Feinberg’s October 7 letter marked the formal conclusion of the assessment. The timing preceded the late October trade negotiations between Washington and Beijing.

The trade truce between Trump and Xi Jinping created uncertainty about list updates. Trade agreements sometimes influence military designation decisions.

US law requires annual updates to the Section 1260H list. The next official update will reveal which companies receive formal designation.

Stock markets reacted to Bloomberg’s Wednesday report about the Pentagon conclusions. Trading reflected investor concerns about potential business impacts from military designations.

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