The Pentagon caused confusion in the markets today after posting a new list of Chinese companies it accuses of aiding China’s military, only to pull the document down minutes later without explanation. Despite the quick retraction, the mistake triggered a selloff in Chinese tech stocks.
Alibaba took the hardest hit, sliding more than 3% in Hong Kong trading. Search giant Baidu and electric vehicle leader BYD also dropped about 1%. All three companies appeared on the updated list on the US Federal Register before officials marked the document as “unpublished.”
Washington calls this the “1260H” designation. While landing on this list doesn’t immediately block a company from doing business, it carries heavy consequences. The Pentagon uses it to block companies from receiving military contracts or US research funding. Perhaps more importantly, it acts as a red flag for American investors. Many experts view this designation as a warning shot that often comes before stricter trade bans or sanctions.
The short-lived update highlighted Washington’s focus on China’s biggest tech players. The US government has now indicated that China’s top AI frontrunners—Alibaba, Baidu, and Tencent—support the country’s armed forces. The list also targeted BYD, which recently overtook Tesla in global electric vehicle sales. interestingly, the agency removed two major memory chip makers, ChangXin Memory Technologies and Yangtze Memory Technologies, from the group.
The companies responded quickly to the allegations. Alibaba released a statement denying any ties to a “military-civil fusion strategy” and threatened to take legal action to stop the misrepresentation. A Baidu spokesperson called the inclusion baseless and said the government produced no evidence to back up the claim. BYD did not respond to requests for comment.
This incident comes at a tense moment for US-China relations. Since the list first appeared in 2021, the Pentagon has added over 130 entities to it, including airlines, construction firms, and shipping companies. Even though the Pentagon withdrew today’s list, the market reaction shows just how jittery investors are about the ongoing tech war between the two superpowers.
