After WuXi AppTec, Alibaba Sues Pentagon to Contest Chinese Military Company Designation
Alibaba Group (HKG:9988) has sued the US Department of Defense on Tuesday, seeking to overturn its designation as a "Chinese military company" and accusing the Pentagon of acting without factual basis or fair process in branding it as a threat to national security.The lawsuit was filed in the US District Court for the Northern District of California in San Jose, also naming Secretary of Defense Pete Hegseth, Deputy Secretary Stephen Feinberg, and Assistant Secretary for Industrial Base Policy Michael Cadenazzi as defendants."The determinations have no basis in fact or law... To label Alibaba a 'Chinese military company' is to brand it an instrument of the Chinese military and a threat to US national security," Alibaba wrote.The Pentagon added Alibaba and several other Chinese companies to its Section 1260H list on June 8, tagging the e-commerce and tech company as "a military-civil fusion contributor to the Chinese defense industrial base because it is affiliated with" the Ministry of Industry and Information Technology.Prior to the lawsuit, Alibaba had denied this designation, calling it "a mistake," according to a June 9 Hong Kong bourse filing."There is no basis to conclude that Alibaba Group should be placed on the CMC List. Alibaba Group is not a Chinese military company nor part of any military-civil fusion strategy."Alibaba at the time warned that it would "take all available legal action against attempts to misrepresent the company."In its lawsuit, Alibaba said it is owned by a broad, public shareholder base, and since early 2025, the only investors to hold 5% or more of its stock are three American financial institutions: JPMorgan, Citigroup, and BlackRock."No individual shareholder controls the company, and no state-owned entity has ever controlled the company," Alibaba argued.The company also stressed that it "has no affiliation with MIIT, SASAC, or the [People's Liberation Army]."SASAC, or the State-owned Assets Supervision and Administration Commission, acts as the state's investor and manages the country's non-financial state-owned enterprises.Alibaba's complaint also noted that it held talks with the Department of Defense prior to the designation. Alibaba said it met with Pentagon officials on Jan. 21 to present information and answer any concerns.The company said it then submitted additional evidence on Jan. 30, detailing its longstanding cooperation with the US government, including a letter from the Director of the National Intellectual Property Rights Coordination Center, part of the US Department of Homeland Security.However, on Feb. 13, the Pentagon posted an updated 1260H list, designating Alibaba as a Chinese military company before withdrawing it within an hour, citing a need to review "the most recent information available."Alibaba said the Department declined to disclose to the company what information it was relying on.Starting June 30, 2026, the Pentagon will be prohibited from "enter[ing] into, renew[ing], or extend[ing] a contract for the procurement of goods, services, or technology" from companies on the designated list.Effective June 30, 2027, the ban extends to the procurement of goods or services that "include goods or services produced or developed by" companies on the list.A spokesperson for the Pentagon declined to comment to, saying the Department does not comment on ongoing litigation.China's Ministry of Commerce had already threatened to retaliate after the Pentagon added Alibaba, Baidu (HKG:9888), BYD (HKG:1211, SHE:002594), Nio (HKG:9866), WuXi AppTec (HKG:2359, SHA:603259) and Robosense Technology (HKG:2498) to the list.The updated list supersedes an earlier version from January 2025, and reinstated ChangXin Memory Technologies and Yangtze Memory Technologies on the list after they were withdrawn from the February version. Both companies are among China's leading memory chipmakers and are currently pursuing public listings.Alibaba is not the first Chinese company to contest the 1260H designation. WuXi AppTec filed its own suit against the Pentagon on June 11, describing its inclusion as "the product of political pressure."In January 2021, Xiaomi (HKG:1810) also sued the US after it was designated as one of several "Communist Chinese military companies" (CCMC) under the National Defense Authorization Act of 1999.The smartphone maker was then removed from the list in May 2021, with the US District Court for the District of Columbia issuing a final order vacating the Pentagon's designation of Xiaomi as a CCMC.Alibaba has also asked the court in California to vacate the designation as "arbitrary and capricious."