Alibaba, one of China’s largest technology corporations, has taken legal action against the U.S. Department of Defense, challenging its placement on a Pentagon list that identifies companies as Chinese military-linked entities — a label that bars them from receiving U.S. defense contracts and carries serious reputational consequences.
The legal petition was filed this week in the San Jose division of the U.S. District Court for the Northern District of California. Alibaba, which trades publicly on the New York Stock Exchange, contends that the designation — announced on June 8 — has “no basis in fact or law” and that the Defense Department failed to follow any fair process before reaching its conclusion.
This is not the first time a Chinese company has gone to court to fight such a label. The move is part of a growing pattern of legal challenges by Chinese firms targeting Pentagon national security classifications.
Back in 2021, with many in Washington growing increasingly concerned about China’s military expansion, Congress directed the Defense Department to compile a list of Chinese companies believed to be directly controlled by Chinese military or security forces, or those thought to have supported China’s defense industry.
That list currently includes 188 entities — ranging from government-owned defense firms to private technology companies like Alibaba and robotics manufacturer Unitree. Both the Chinese government and several of the named companies have pushed back against the designations.
Adding to the diplomatic tension, Beijing announced sanctions on Monday targeting 10 American companies with military ties — a move that risks further straining relations between the U.S. and China at a time when both governments have been working to ease tensions.
Another company caught up in similar controversy is WuXi AppTec Co., which provides research, development, and manufacturing services to hundreds of American pharmaceutical and life sciences firms. The Pentagon added the company to the list, stating it is “indirectly owned” by China’s state-owned Assets Supervision and Administration Commission and is also “indirectly affiliated” with both the State Administration of Science, Technology and Industry for National Defense and the People’s Liberation Army.
WuXi AppTec is fighting its designation in federal court in Washington, D.C. In a petition filed June 11, the company stated the label has “already caused and will continue to cause several and irreparable harms,” calling the classification “the product of political pressure and inaccurate, unsupported assertions.”
In its own petition filed Tuesday, Alibaba stated that the designation is driving away U.S. investors and causing significant damage, given how heavily the company relies on the confidence of its American business partners.
The Pentagon’s position is that Alibaba is connected to China’s Assets Supervision and Administration Commission and that it contributes to China’s military-industrial base through ties to China’s Ministry of Industry and Information Technology.
Alibaba disputes this, saying in its petition that the company is managed by an independent board of directors and holds no military certifications or licenses. The company denies any relationship with the Assets Supervision and Administration Commission and argues that complying with the Ministry of Industry and Information Technology is simply a legal requirement for any company operating in China — including American ones. As the petition bluntly states: “A regulator is not an affiliate.”
This legal battle has a precedent worth noting: a federal judge ruled against Chinese drone manufacturer DJI Technology last year when it sought to be removed from the same Pentagon list. DJI is currently appealing that ruling.
