Pentagon Designates BYD, Alibaba and Baidu as Chinese Military Companies

The Pentagon announced that it has updated the list of companies that U.S. defense branches are barred from doing business with. The newly blacklisted firms include automaker BYD, e-commerce giant Alibaba and tech company Baidu. The reason given is that they help the Chinese regime exploit technology for military purposes. The decision is expected to hurt the companies' ability to do business with civilian firms in the United States.

The Pentagon said today, Wednesday, that it is classifying the three Chinese giants BYD, Alibaba and Baidu as Chinese military companies. The decision, parts of which were first reported earlier this week, adds the electric vehicle maker, the technology giants and other Chinese companies to a list of nearly 200 firms defined as linked to the Chinese military.

At the heart of the Defense Department's decision is the claim that the companies help the Chinese regime use civilian technology for military purposes. The practical meaning of the move is that U.S. defense branches are barred from contracting with the companies starting at the end of the month. In June 2027, the restriction will be extended to indirect procurement as well, meaning the Pentagon will prohibit contracts with American companies that use these Chinese firms as suppliers, a move expected to sever business ties with them more broadly.

The decision does not currently restrict American consumers from buying from the Chinese companies or using their services, and BYD does not sell cars in the United States anyway. However, the history of the list suggests that being added to it is often only an intermediate step. Companies previously placed on it, such as Chinese tech giant Huawei, later faced far more severe commercial restrictions. CNBC quoted experts as saying the current restrictions may be only the first stage, and that American businesses working with the Chinese companies are already weighing their next steps.

According to estimates, the timing of the updated list is not accidental, coming less than a month after U.S. President Donald Trump met his Chinese counterpart Xi Jinping and the two declared a trade truce. "The meeting did not stop the competition, it made clear where it will continue," Craig Singleton, a U.S. China relations expert at the Foundation for Defense of Democracies, told the Financial Times.

In fact, the decision to expand the list of banned Chinese companies was already published in February, but the Pentagon reversed it within an hour without explanation. According to the Financial Times, the assumption at the time was that Trump did not want problematic headlines ahead of his expected visit to Beijing. The new list is almost identical to the one published then, with one major difference, Chinese memory chip makers CXMT and YMTC, whose omission from the list had drawn harsh criticism in Washington, have now been included.

All of the companies added to the blacklist denied the American allegations that they assist the Chinese military. Alibaba said there was "no basis" for its inclusion on the list and said it would take legal action. Baidu said the accusation was "completely baseless" and BYD said there was "no justification" for its inclusion.

The Chinese government also reacted sharply. A spokeswoman for the embassy in Washington called on the United States to "stop the wrong practice and create a fair environment for Chinese companies."

The American decision does not directly affect Israel, although some of the Chinese companies have a significant presence there, especially BYD, which overtook Tesla in the race to become the world's largest electric vehicle maker. In Israel, BYD cars were previously purchased by the police, while other Chinese automakers supply vehicles to permanent-service soldiers in the IDF and to the security team at the Kirya base in Tel Aviv.