Pentagon adds Alibaba, BYD and Baidu to firms with ties to China’s military

Investing.com -- The Pentagon added Alibaba Group Holding Ltd., BYD Co. and Baidu Inc. to its list of companies that support the Chinese military on Monday. The announcement was posted to the Federal Register and updates the Defense Department's roster of companies believed to aid the People's Liberation Army.

Following the announcement, Alibaba Group shares fell 0.5%, BYD declined 0.5%, and Baidu dropped 2.3%. NIO, which rose over 2% earlier in the day, gave back some gains after the news.

Other notable companies on the list are CATL, Tencent, Huawei, DJI, TP-Link, Unitree, Hikvision, COSCO Shipping, China Mobile, China Telecom, China Unicom, CNOOC, China State Shipbuilding, Norinco, China Three Gorges, WuXi AppTec, and others.

The Defense Department cited direct or indirect affiliations with Chinese state entities including SASAC, MIIT, SASTIND, the PLA, the People's Armed Police, or Chinese security and law-enforcement bodies. The Pentagon also pointed to military-civil fusion factors, "Little Giant" or "Single Champion" designations, military-civil fusion enterprise zones, military production licenses, or assistance from Chinese government science and industrial programs tied to military planning.

The Defense Department updates the roster annually to identify companies believed by the U.S. to aid the People’s Liberation Army.

The designation carries limited immediate legal consequences. The Pentagon has increasingly used the list to limit companies’ ability to secure military contracts or obtain research funding. A 1260H designation also functions as a notice to U.S. investors and is viewed as a potential precursor to more restrictive trade measures.

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