The United States Department of Defense has added BYD, Alibaba, Baidu, and Nio, among others, to its Section 1260H list of companies with alleged ties to the Chinese military. The list, published Monday in the Federal Register, now names 188 “Chinese military companies” the Pentagon considers a national security risk. Inclusion does not constitute an immediate sanction, but it flags American organisations to the risks of doing business with listed firms. BYD, which does not currently export cars to the United States, surpassed Tesla earlier this year to become the world’s top electric vehicle manufacturer. The Chinese embassy called the list “discriminatory.” Alibaba’s spokesperson said there was “no basis” for inclusion. Baidu said it would “use all options available” to have its name removed. Policy analyst Stefanie Kam of Nanyang Technological University said Beijing is likely to view the move as “a form of economic containment” and that China could retaliate with tit-for-tat measures, its own blacklist, or diplomatic pushback.
The received wisdom
The mainstream national security framing is straightforward: China operates under a “military-civil fusion” strategy that explicitly blurs the line between commercial enterprise and state defence capacity, and the Pentagon list is a reasonable transparency measure — not a sanction but a risk disclosure. On this reading, Western democracies have for too long allowed naive commercial logic to obscure genuine dual-use risks: the same AI capabilities that make Baidu a competitive search engine could serve military surveillance applications; the same battery technology that makes BYD the world’s leading EV manufacturer could support military logistics. The list is not aggression but due diligence.
The progressive counter-argument — that the list is arbitrary, discriminatory, and risks driving a wedge through global supply chains without producing any real security benefit — deserves a hearing. The US appears, as Kam notes, to have flagged companies for “participation in state programmes rather than based on clear evidence of contracts with the Chinese military.” That distinction matters, because virtually every major Chinese company participates in some form of state programme. If the criterion is state-programme participation rather than active military contracting, the list is less a security instrument than a geopolitical signal.
A different read
But the more interesting question is not whether the list is well-constructed — it probably is not — but what kind of economic competition the United States is actually trying to conduct, and whether the tools match the objective.
The military-civil fusion charge against BYD is worth examining. BYD does not export cars to the United States. Its competitive threat to American industry is real — it became the world’s top EV maker this year by producing vehicles of increasing quality at prices American manufacturers cannot match — but it is not obviously a military threat in any direct sense. The battery technology is dual-use in theory. But so is almost any advanced manufacturing capability. Adding BYD to a military companies list is a way of tagging a commercial competitor with a security designation that its American rivals do not carry, regardless of the actual military connection.
This is the pattern of economic cold war: using security architecture to accomplish commercial goals, while using commercial concerns to obscure security ones. It is not entirely dishonest — China really does blur the lines, and the US really does have legitimate concerns about supply chain dependencies — but it produces a policy instrument that is neither an effective security measure nor a transparent trade measure. It sits in the middle, doing each job poorly.
The historical parallel is instructive. In the 1980s, the United States used the COCOM framework — the Coordinating Committee for Multilateral Export Controls — to restrict technology transfers to the Soviet bloc. COCOM was effective partly because it had clear criteria (military applicability) and multilateral buy-in from allied democracies. The current list has neither. Allied governments in Europe and South Korea are not coordinating their own equivalent designations; they are watching with a mixture of alarm and calculation, aware that China-dependent industries in their own economies could be next in Washington’s crosshairs. Japanese carmakers rely on BYD battery chemistry. German chemical companies supply CATL, which is also on the list. The fragmentation of global supply chains that Section 1260H is meant to accelerate is one that America’s allies are not uniformly eager to participate in.
The harder argument, which the list’s architects would presumably make, is that the time for nuance has passed. China’s military buildup, its economic coercion of Australia and Taiwan, its support for Russia — these represent a systemic challenge that cannot be managed through case-by-case commercial adjudication. There is something to this. The mistake of the 1990s and 2000s was to assume that economic integration would liberalise China politically, and to ignore the security dimensions of deepening dependency. Correcting that mistake requires some deliberate decoupling, even at economic cost.
The question is whether a list that includes BYD alongside Huawei — a company the US has actually barred American businesses from transacting with — helps or hinders that project. A list that is too broad loses credibility and gives Beijing a coherent “economic aggression” counter-narrative that resonates in the Global South and in allied capitals. A more targeted instrument, focused on sectors with clear dual-use military applicability, would be harder for Beijing to dismiss and easier for allies to coordinate around.
What to watch
Watch whether any of the newly listed companies — particularly BYD and Alibaba — pursue legal challenges in US courts, which would force judges to define what “military ties” actually means as a legal threshold. Watch for Chinese government retaliation: a reciprocal “unreliable entities” list designation of American firms, or restrictions on critical mineral exports that feed into US defence manufacturing. And watch whether European governments issue guidance on the list’s implications for their own firms’ supply chain decisions — allied ambivalence on this point will determine whether the designation produces strategic realignment or just transatlantic friction.
— J