A growing legal standoff between major Chinese technology firms and the U.S. Department of Defense has escalated this week, with Chinese e-commerce and cloud computing giant Alibaba filing a federal lawsuit to force its removal from a controversial Pentagon blacklist of companies labeled as tied to the Chinese military.
The designation, formally announced by the Pentagon on June 8, bars listed entities from accessing U.S. defense contracts and inflicts severe reputational harm that undermines global investor and partner confidence. In its petition filed Monday with the U.S. District Court Northern District of California, San Jose Division, the New York Stock Exchange-listed Alibaba argues the classification lacks any legitimate foundation in either fact or American law, and that the Pentagon failed to follow fair procedural standards when reaching its decision.
The blacklisting initiative was first mandated by U.S. Congress in 2021, amid rising political tensions in Washington over China’s expanding military influence globally. The law required the Defense Department to compile a registry of Chinese firms that officials claim are directly controlled by China’s military and security apparatus, or that contribute to China’s national defense industrial base. Today, the list includes 188 Chinese entities spanning state-owned defense contractors and private sector technology companies, including Alibaba, robotics developer Unitree, and biotech research firm WuXi AppTec, which was also added in the latest round of designations.
The Pentagon’s justification for adding WuXi AppTec claims the firm is indirectly owned by China’s State-owned Assets Supervision and Administration Commission (SASAC), and maintains indirect affiliations with China’s State Administration of Science, Technology and Industry for National Defense and the People’s Liberation Army. WuXi AppTec, which provides research and manufacturing services to hundreds of U.S. pharmaceutical and life sciences companies, has already filed its own legal challenge in the U.S. District Court for the District of Columbia. In its June 11 filing, the firm calls the designation the result of political pressure and unsupported factual claims, noting the labeling has already caused severe and irreversible harm that will continue without judicial intervention.
For its part, the Pentagon defends Alibaba’s inclusion by claiming the firm is affiliated with SASAC and contributes to China’s defense industrial complex through ties to China’s Ministry of Industry and Information Technology (MIIT). Alibaba pushes back strongly against these assertions in its lawsuit, noting it operates under an independent board of directors, holds no military certifications or licenses, and has no formal or operational connection to SASAC. Alibaba further argues that routine regulatory compliance with MIIT requirements — a mandate for all companies operating in China, including U.S.-owned firms — does not make the ministry an affiliate of the company. “A regulator is not an affiliate,” the company’s petition plainly states.
Alibaba also emphasizes the tangible damage the designation has already inflicted: the firm reports it has already lost U.S.-based backers, and that ongoing harm will grow as its business relies heavily on the trust of U.S. commercial partners.
This lawsuit marks the latest in a string of legal challenges from Chinese technology firms targeted by the blacklist. Last year, a U.S. judge ruled against Chinese drone manufacturer DJI Technology’s bid to be removed from the registry, and DJI has since appealed the ruling. Both the Chinese government and multiple targeted companies have repeatedly protested the designations as politically motivated and factually unfounded.
The legal clash comes amid already heightened bilateral tensions, after Beijing announced sanctions against 10 U.S. military-related companies earlier this week. The measures come at a time when both Beijing and Washington have publicly stated they are working to stabilize tense bilateral relations, making the escalation a point of growing concern for global market and diplomatic observers.