The US Department of Defense (Pentagon) has taken a radical step in tightening economic and technological relations with Beijing, adding some of China’s largest technology and automotive giants to the official list of military companies. Among the new entities on this rigid list were the e-commerce giant Alibabaone of the leaders in the global electric vehicle market BYDas well as an Internet browser Baidu.
This decision automatically blocks the aforementioned companies from entering into any future defense and security contracts with the US Government.
Targeting the civilian sector and “military-civilian fusion”
The blacklist, which the Pentagon updated and released on June 8, now directly hits well-known, private companies that have traditionally never been considered part of a dedicated industry. The move reflects Washington’s growing wariness of Beijing’s strategy, which it claims involves covertly using the capacities of successful civilian and commercial businesses for military purposes.
This list was created in 2021 by order of the US Congress with the aim of timely identifying Chinese companies that contribute in any way to China’s defense and industrial base. The Pentagon points out that the Chinese military is actively trying to appropriate advanced technologies, software and expertise from entities that in public, as they say they look like exclusively civilian structures.
The total number of sanctioned companies on this list increased to 188which is a huge jump compared to last year’s 130. It has also previously housed the world leader in the production of commercial drones. DJI. Although these companies can technically still sell their products to American consumers, the listing deals a blow to their global reputation and opens the door to the imposition of much tougher economic barriers.
Sharp reactions: “Totally baseless accusations“
The Chinese embassy in Washington immediately condemned this move. She accused the US administration of “abuse and excessive stretching of the concept of national security, as well as the creation of discriminatory lists for the purpose of deliberately persecuting successful Chinese companies“.
The companies themselves strongly denied any connection with military structures in their official statements:
- Alibaba said the following: „Our company is not a Chinese military company, nor are we part of any government strategy regarding military-civilian fusion“
- Baidu (which has recently been massively expanding into the field of artificial intelligence and autonomous taxi vehicles): “All suggestions that we are a military company are completely and absolutely unfounded“
- BYD: „We are not a military enterprise. This decision is completely inconsistent with the facts. Mand we will actively defend our legitimate rights and interests through all available legal and administrative channels“.
Congress seeks delisting from US stock exchanges
After being from Pentagon updated list, the US House Special Committee on the Chinese Communist Party issued a stark warning to the American business community and the public. The Committee requests that companies from this list completely removed and even expelled from the stock marketand that no American company can do business with them anymore.
As a reason for including Alibaba, Baidu and BYD in the list, Pentagon cites their direct connection to China’s Ministry of Industry and Information Technology, the body that directly oversees China’s overall technology and industrial policy.
BYD is also under attack, despite Trump’s earlier promises
Sanctioning decision BYD company it comes at a rather contradictory moment for American politics. ABC News remindsthe president Donald Tramp stated in January that he would publicly welcome the arrival of Chinese car manufacturers if they decided to build factories on US soil and employ American workers there. On the other hand, a large number of American lawmakers from both political parties are still aggressively pushing legislation to permanently and completely ban Chinese electric vehicles in America.
In addition to the tech and auto giants, another interesting name on the new list is a Chinese robotics company Unitree. The Pentagon alleges that Unitree knowingly received financial and strategic aid from the Chinese government under the guise of supporting innovative small and medium-sized businesses critical to the global robotics supply chain.