(Bloomberg) — The Pentagon added Alibaba Group Holding Ltd., Baidu Inc. and BYD Co. to a list of companies that aid the Chinese military, a move that amounts to a US government warning for investors even though it carries no direct legal repercussions.
The high-profile inclusions risk straining President Donald Trump’s visit to China that’s set for April, especially given Alibaba’s prominence. Trump’s meeting with President Xi Jinping in Beijing is expected to include discussion about plans to export Nvidia Corp.’s H200 chips to China, and Alibaba is among the companies that could seek to get them.
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The list also included RoboSense Technology Co. and wireless router maker TP-Link Technologies Co.
Alibaba’s American depositary receipts shares fell as much as 5% in extended trading on Friday. Inclusion on the list could amount to a serious challenge for Alibaba, which is stepping up efforts to compete globally in artificial intelligence.
“There’s no basis to conclude that Alibaba should be placed on the Section 1260H List,” a company spokesperson said in a statement. “Alibaba is not a Chinese military company nor part of any military-civil fusion strategy. We will take all available legal action against attempts to misrepresent our company.”
Baidu’s receipts were down 4.5%. Spokespeople for Baidu didn’t immediately respond to a request for comment outside of regular office hours.
The list, first published in 2021, now includes more than 130 entities accused of working with the Chinese military. The names include those of airlines, construction companies, shipping companies, computer hardware manufacturers and communications companies.
Deputy Defense Secretary Stephen Feinberg had indicated in October that Alibaba, BYD, Robosense and other companies would be added to the list when he sent a letter to the heads of the House and Senate Armed Services Committees, Bloomberg reported at the time.
An analysis by the law firm of Hogan and Lovells said inclusion on the 1260H List has “several direct and indirect implications,” including restrictions on US defense contracts, potential inclusion on other restricted party lists, reputational damage and increased compliance costs.
–With assistance from Edwin Chan and Debby Wu.
