The Pentagon has added several prominent Chinese businesses to its list of Chinese military companies. This move blocks them from securing U.S. defense contracts. The list, which includes tech giant Alibaba, electric car maker BYD, and search engine Baidu, was updated on Monday.
The updated list now sanctions well-known, non-state-owned Chinese companies. These are not typically associated with the defense or security sector. The decision highlights increasing concern over Beijing’s strategy to leverage non-state enterprises for military purposes.
Background of the List
Established in 2021 by a congressional mandate, the list identifies Chinese companies linked to the Chinese military. This not only includes those directly controlled by military and security forces but also those contributing to the defense industrial base. The Pentagon believes the Chinese military seeks advanced technologies and expertise from Chinese companies, universities, and research programs presenting themselves as civilian entities.
Reactions and Repercussions
The Chinese Embassy has accused the U.S. of overstretching the concept of national security. They allege the U.S. discriminatively targets Chinese companies through such lists. They emphasize that Chinese companies adhere to the laws and regulations of their operating countries.
‘The U.S. should stop its wrong practice and create a fair, just and non-discriminatory environment for Chinese companies,’ the embassy stated.
Both Alibaba and Baidu reject their inclusion. Alibaba insists it is neither a Chinese military company nor involved in any military-civil fusion strategy. Baidu, which is branching into artificial intelligence and self-driving taxis, calls their inclusion ‘entirely baseless.’
Implications for Businesses
The new list now includes 188 Chinese entities, compared to last year’s 130. It has previously included companies like DJI, a major drone manufacturer. While listed companies can still operate in the U.S., they face reputational damage and may encounter further restrictions.
The House Select Committee on the Chinese Communist Party views the list as a warning. They advise American businesses to refrain from engaging with these companies. They recommend delisting publicly traded entities on U.S. exchanges to avoid enabling China’s military developments.
Specific Companies and Allegations
The Pentagon argues that Alibaba enhances China’s defense base due to its affiliation with the Ministry of Industry and Information Technology. Alibaba trades on the New York Stock Exchange. Similarly, BYD and Baidu are linked to the same ministry, which manages China’s technology and industrial policies.
BYD is a global leader in the electric vehicle market. President Donald Trump expressed openness to Chinese carmakers, like BYD, building plants and hiring American workers in the U.S. Nonetheless, several U.S. lawmakers propose banning Chinese electric vehicles.
The Pentagon also added the Chinese robotics company Unitree known for its robots on NBC’s ‘America’s Got Talent’. They claim Unitree received government aid due to its classification as an innovative and critical company in the supply chain. Emails to BYD and Unitree seeking comment went unanswered.