Pentagon’s Latest China Blacklist Reflects Growing Doubts About Private Firms’ Independence

The Department of War’s expanded list underscores concerns that Chinese firms may be required to support state objectives.

BYD electric cars for export waiting to be loaded on the "BYD Explorer NO.1," a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in Shandong Province, China, on Jan. 10, 2024. STR/AFP via Getty Images

The Pentagon’s recent decision to add several of China’s best-known tech and manufacturing companies to a list of firms linked to the Chinese military is drawing renewed attention to a question at the center of U.S.–China tensions—how independent are Chinese private companies from the Chinese Communist Party (CCP)?

In an updated list released on June 8, the Department of War added a number of major Chinese firms to its Section 1260H list of entities identified as having ties to China’s military-industrial complex.

Newly designated companies include e-commerce platform Alibaba, search engine Baidu, electric vehicle (EV) manufacturer BYD, memory chip manufacturers Yangtze Memory Technologies Corp. (YMTC) and ChangXin Memory Technologies (CXMT), pharmaceutical company WuXi AppTec, robotics firm Unitree Robotics, and lidar manufacturer RoboSense.

The revised list now contains 188 entities.

U.S. military agencies are restricted from directly procuring goods and services from companies on the list, with procurement restrictions expected to expand to third-party suppliers in the future.

Several of the blacklisted firms said they oppose the designation by U.S. authorities.

The latest additions highlight growing concerns in Washington that China’s policy of “military-civil fusion“ blurs the line between private enterprise and state security interests.

‘Military-Civil Fusion’ Under Scrutiny

The Pentagon document cited Baidu’s indirect links to China’s state-owned Assets Supervision and Administration Commission (SASAC) and connections with China’s Ministry of Industry and Information Technology (MIIT). The Pentagon also described the company as a contributor to China’s military-civil fusion strategy and defense industrial base.

BYD was cited for direct and indirect ties to Chinese state agencies and military-civil fusion industrial parks, while memory chip maker CXMT was identified as having links to both SASAC and the MIIT.

Industry insiders spoke to The Epoch Times on condition of anonymity or only publishing their surnames out of fear of reprisal.

A technology industry insider in China, surnamed Fang, told the publication that many of the sectors targeted by the Pentagon are deeply intertwined with the CCP’s funding and strategic industrial policies.

“In China, industries such as AI, EVs, cloud computing, and big data are extremely difficult to separate completely from state funding, industrial policy, and the military-industrial system,” he said. “Many companies receive state contracts, operate in state-backed industrial parks, or participate in national laboratories and demonstration projects. Within China, those connections are considered advantages. In the United States, they can become evidence of strategic risk.”

Fang said the CCP increasingly views major technology companies as extensions of state power.

“Once a company becomes tied to the Chinese market, Chinese capital, and state-sponsored projects, it becomes difficult to claim complete independence,” he said.

The logo of Alibaba in Shanghai, China, on July 6, 2023. Wang Zhao/AFP via Getty Images

Critics of China’s corporate governance model interviewed by The Epoch Times point to legal requirements that they say make it difficult for private companies to remain independent from state security objectives.

Article 7 of China’s National Intelligence Law states that all organizations and citizens shall support, assist, and cooperate with national intelligence work in accordance with the law and keep such activities confidential.

As a result, technologies controlled by private firms—including data platforms, algorithms, cloud computing infrastructure, semiconductors, EVs, batteries, and robotic systems—could be incorporated into broader state strategic initiatives, according to critics.

Those concerns are among the reasons the United States has increasingly focused on major Chinese companies that publicly identify as private enterprises but operate within China’s military-civil fusion framework.

‘Lack of Transparency’

A Chinese scholar told The Epoch Times that the Pentagon’s latest expansion goes beyond traditional defense contractors.

“Companies like Baidu and BYD operate in fields such as artificial intelligence and electric vehicles, but large firms in China are often closely aligned with government strategic priorities both domestically and internationally,” the scholar said. “The essence of military-civil fusion is that civilian companies can be called upon to support the military and national security system whenever needed.”

The scholar said that many of the firms appear to be ordinary commercial enterprises on the surface, but military-civil fusion policies make it difficult to assess the extent of cooperation that may occur behind the scenes.

“That lack of transparency is what concerns U.S. policymakers,” he said. “[Chinese] companies may insist there is no basis for these accusations, but the public has very limited visibility into how firms cooperate with the regime behind closed doors.”

According to the scholar, Chinese companies often benefit from state subsidies, access to data, and policy incentives at home, while presenting themselves abroad as ordinary private businesses.

“That argument is becoming increasingly difficult for the United States to accept,” he said.

Hu Ying and Reuters contributed to this report.