Overview

Bloomberg News has reported that the United States Department of Defense has concluded that Alibaba Group, Baidu and BYD should be added to an official list of Chinese companies that support the People's Liberation Army. Reuters, citing the Bloomberg report and a letter seen by lawmakers, said the conclusion was communicated by Deputy Defense Secretary Stephen Feinberg in early October. The case shows how Chinese internet and electric vehicle champions are now viewed in Washington as part of a wider security contest rather than just commercial rivals.

At the heart of the story is the Section 1260H list, a roster of Chinese military companies that the Pentagon is legally required to maintain. Being placed on the list does not automatically trigger sanctions, but it sends a strong signal to investors and contractors that the United States government believes a company is linked to China's military civil fusion strategy. The potential addition of Alibaba, Baidu and BYD would mark a significant broadening of the list toward consumer facing platforms, cloud infrastructure and electric vehicle supply chains.

What the Pentagon Letter Said and Who Is Pushing the Move

According to Bloomberg's account, Deputy Defense Secretary Stephen Feinberg told members of Congress in an October letter that the Defense Department had concluded Alibaba, Baidu and BYD, along with several other firms, merit inclusion on the Section 1260H list. He reportedly wrote that these companies provide technologies and services that support Chinese military aims and therefore fall under the statutory criteria for Chinese military companies operating in or through the United States.

U.S. lawmakers who have pressed for a tougher line on Chinese technology firms seized on the letter as evidence that the Pentagon is now aligned with congressional concerns. Members of both parties have argued that cloud computing, artificial intelligence platforms and advanced battery plants give Beijing tools that can be used for surveillance, logistics and next generation weapons systems. For them, adding the three firms to the list is a necessary step to warn financial markets and prepare the ground for tighter controls.

Why Alibaba, Baidu and BYD Are in Focus

Alibaba operates one of the largest cloud computing platforms in China and provides data storage, analytics and artificial intelligence services to enterprises and government agencies. A recent White House national security memo, described by the Financial Times, claimed that Alibaba has provided technology and data support to the Chinese military, including access to user data such as internet protocol addresses and payment information. The company has denied those accusations, calling them unfounded and politically motivated.

Baidu is a leading Chinese artificial intelligence and internet search company. Its work on large language models, autonomous driving systems and mapping data gives it capabilities that are highly relevant to modern military operations. BYD, meanwhile, is a global electric vehicle and battery manufacturer. Its factories and research programs produce batteries and power systems that could be repurposed for military logistics, drones or other defense applications. Pentagon officials and hawkish lawmakers argue that, under China's civil military fusion strategy, these commercial strengths are expected to serve the People's Liberation Army when called upon.

How the Companies and Beijing Respond

As of the initial Bloomberg and Reuters reporting, Alibaba, Baidu and BYD had not issued detailed public statements on the Pentagon recommendation. Based on past designations under Section 1260H, Chinese companies added to the list typically respond by denying any military role and stressing their focus on civilian markets. Battery maker CATL and technology group Tencent, which were added in an earlier update to the list, have both rejected suggestions that they support China's military.

China's Ministry of Foreign Affairs has consistently criticized the Section 1260H list and similar U.S. measures as examples of Washington overstretching the concept of national security and trying to contain China's development. Official statements argue that the lists lack factual basis, violate market principles and damage global supply chains. Beijing also frames the designations as part of a broader campaign to block Chinese firms from overseas markets and capital.

What Listing Could Mean for Markets and U.S.–China Tech Competition

Being named on the Pentagon's list does not automatically bar a company from U.S. markets, but it has concrete consequences over time. Congress has already passed measures that will restrict the Defense Department from contracting with entities that appear on the list and, later, from buying goods or services that include inputs from those companies. The designation also raises pressure on financial regulators and index providers to review the presence of listed firms in U.S. portfolios.

For Alibaba, Baidu and BYD, the reputational hit could be significant, especially among institutional investors that must comply with stricter environmental, social and governance policies. Banks and asset managers may decide that the legal and political risks of holding or underwriting the stocks are rising. At the same time, the move is likely to reinforce Beijing's view that the United States is seeking to decouple critical digital and clean energy infrastructure from Chinese technology, accelerating separate ecosystems for cloud services, artificial intelligence and electric vehicles.

For Washington, expanding the Section 1260H list to include more high profile tech champions underlines how national security thinking now runs through everything from data centers and mapping applications to batteries and charging networks. The Pentagon, Congress and the White House are all converging on the idea that the boundary between civilian and military technology in China is effectively gone, and that U.S. policy must adapt accordingly.

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