In a major escalation of the technology and economic standoff between Washington and Beijing, the U.S. Department of Defense (DoD) has formally updated its Section 1260H blacklist.

The new roster adds several of China's most powerful, publicly traded commercial entities—including e-commerce and cloud giant Alibaba, search and AI heavyweight Baidu, and global electric vehicle leader BYD - designating them as "Chinese military companies."

The release expands the blacklist to 188 entities, up from roughly 130 on last year's version. The move sends a definitive signal that Washington's national security apparatus is increasingly targeting consumer-facing, non-state-owned Chinese conglomerates that have historically operated outside the traditional defense sector.

Why Were They Designated? The "Military-Civil Fusion" Link

According to the official Pentagon filing, the companies were flagged due to their deep institutional connections to Beijing's state apparatus and its "Military-Civil Fusion" (MCF) strategy, a national mandate requiring private-sector commercial enterprises to share advanced technologies with the People's Liberation Army (PLA).

The DoD's specific justifications include:

Alibaba & Baidu: Both firms were identified as military-civil fusion contributors due to their close operating affiliations with China’s Ministry of Industry and Information Technology (MIIT), which oversees the country's technological and industrial policies, as well as indirect ties to the State-Owned Assets Supervision and Administration Commission (SASAC).
BYD: The world’s top electric vehicle manufacturer was designated due to its direct and indirect ties to SASAC, its MIIT affiliations, and for operating within designated military-civil fusion enterprise zones.

With these additions, the U.S. government has now blacklisted three of China’s major artificial intelligence pioneers—Alibaba, Baidu, and Tencent (the latter added in 2025)—effectively declaring them arms of the Chinese defense industrial base.

What Are the Real-World Repercussions?

While inclusion on the 1260H list does not trigger immediate financial sanctions or asset freezes, it carries severe operational and reputational weight:

Supply Chain Bans: Under the National Defense Authorization Act (NDAA), the Pentagon is legally barred from entering into or renewing direct contracts with any listed entity starting June 30, 2026. A strict ban on purchasing their goods or services via third-party intermediaries will kick in exactly one year later, in June 2027.
Investment Red Flags: The list acts as an official advisory mechanism warning American institutional investors, venture capital firms, and defense contractors against doing business with these brands.
Political Pressure to Delist: Following the announcement, Representative John Moolenaar, Chairman of the House China Select Committee, issued a stern warning, stating that any listed firms publicly traded on U.S. exchanges—such as Alibaba on the NYSE - should be immediately delisted.