Economic relations between the United States and China are once again under strain. Beijing has reacted strongly to the Pentagon’s decision to expand the list of companies which, according to the US administration, are supporting the development of China’s military capabilities. The updated list includes some of China’s most recognisable technology and industrial brands, including Alibaba, Baidu, BYD, NIO, Trina Solar and JA Solar.
The US Department of Defence argues that some Chinese companies operate under the so-called ‘military-civil fusion’ model, i.e. cooperation between the civilian and military sectors. According to Washington, private companies may support the development of technologies used by the Chinese armed forces. The updated list now comprises 188 entities and is one of the largest since the programme was launched in 2021.
Being placed on the list does not in itself mean that sanctions are imposed. However, the decision carries specific consequences. The Pentagon will not be able to enter into direct contracts with the listed companies, and from 2027 the ban will also cover purchases made through third parties. Experts point out that the listing may also increase regulatory and reputational pressure on companies operating in the US market.
The Chinese Ministry of Commerce has described the US actions as “malpractices” and called for the decision to be withdrawn. Beijing stresses that the move undermines the agreements reached during the recent meeting between Presidents Donald Trump and Xi Jinping, which was intended to help stabilise economic relations between the two countries. Chinese officials have also hinted at the possibility of retaliatory measures.
The companies themselves have also responded to the allegations. Alibaba and Baidu have rejected accusations of links to the military, describing them as baseless and announcing legal action to have them removed from the list.
The Pentagon’s new decision shows that, despite periodic attempts to improve relations, technological and strategic rivalry between the US and China remains one of the most important issues in global economic policy.
