Recently, the Pentagon updated its list of Chinese companies assisting the People’s Liberation Army, including Alibaba, Baidu, BYD, Yangtze Memory Technologies, ChangXin Memory Technologies, WuXi AppTec, Yushu Technology, and Sugon Juchuang, all listed in the 1260H list of Chinese military-related enterprises. An interviewee revealed the plight of private Chinese enterprises: under relevant regulations such as the National Security Law and the National Intelligence Law of the Chinese Communist Party (CCP), individuals and organizations are obliged to cooperate with official demands under the guise of national security and intelligence work, making it difficult for large private enterprises to refuse strategic requests from authorities.
According to documents released by the US Department of Defense on June 8, the updated list includes 188 entities. Reuters reported that once included in the list, the US military will be restricted from directly procuring from these enterprises, with restrictions expanding to third-party procurement in the future. The Financial Times reported that the list itself may not immediately impose sanctions on the majority of enterprises, but could indicate that the US will take stricter measures in the future.
Official US documents indicate Baidu’s listing due to indirect links with the State-owned Assets Supervision and Administration Commission of the State Council of China, as well as with the Ministry of Industry and Information Technology of the CCP. The documents also state that Baidu is a contributor to the fusion of civil and military industries in the CCP’s defense industrial base. BYD is mentioned for its direct or indirect associations with the State-owned Assets Supervision and Administration Commission and the Ministry of Industry and Information Technology, as well as its connection with the military-civilian fusion enterprise park. ChangXin Memory Technologies is implicated for its associations with the Ministry of Industry and Information Technology and the State-owned Assets Supervision and Administration Commission.
Mr. Fang, an industry insider, disclosed to reporters, “In China, fields like artificial intelligence, autonomous driving, cloud computing, and big data are difficult to completely separate from government funding, industrial policies, and the military-industrial system. Many enterprises take on government projects, enter industrial parks, participate in national laboratories or demonstration projects – domestically, these are resources; in the US, they become evidence of risk. Essentially, the CCP has viewed many technology companies as tentacles extending the regime externally. As long as they are intertwined with the Chinese market, Chinese funds, and Chinese official projects, enterprises find it challenging to claim complete independence.”
According to Article 7 of the original text of the Chinese National Intelligence Law of the CCP, all organizations and citizens must support, assist, and cooperate with national intelligence work in accordance with the law, and safeguard the secrecy of intelligence work they are aware of. Some interviewees believe that these laws prevent Chinese private enterprises from truly being independent of the CCP regime. Data, algorithms, cloud computing, chips, automobiles, batteries, and robotics technologies held by enterprises may potentially be included in official strategic requirements when needed. This is a significant reason why the US has included major private enterprises like Baidu, Alibaba, and BYD on the military enterprise list.
Chinese scholar Yao Ming (pseudonym) told reporters that the US’s expanded list targets not only traditional military-industrial enterprises. He said, “Companies like Baidu and BYD, seemingly operating in industries like artificial intelligence and electric vehicles, are tied to the government’s strategic intentions both domestically and internationally. The so-called military-civil fusion means to support the military and national security system at any time when needed.”
Responding to Reuters on June 9, Baidu opposed being included in the list, stating that the US had no credible basis for its inclusion. Baidu argues that the assertion of it being a ‘military company’ is baseless. Alibaba, BYD, WuXi AppTec, and other companies also denied any association with the Chinese military.
Yao Ming believes that outwardly, some companies may not exhibit clear CCP military characteristics, but due to the military-civil fusion relationship, they may be required to fulfill official missions. He said, “For instance, if American companies launch new internet products, it’s difficult for outsiders to know whether related Chinese companies will gather and analyze relevant data as required by authorities. What concerns the US is this lack of transparency in the mechanism. Baidu claims the US has no basis, but how enterprises coordinate with the authorities behind the scenes is challenging for the outside world to grasp.”
Yao Ming pointed out that the CCP has always emphasized military-civil fusion. Enterprises domestically benefit from policies, funds, environments, and data resources; once overseas, they claim to be ordinary private enterprises only, and this narrative is becoming increasingly difficult for the US to accept.