The U.S. government on Friday triggered market volatility after briefly adding Chinese tech giants Alibaba and Baidu to a blacklist of companies allegedly aiding Beijing's military, only to withdraw the document an hour later.
The update to the Pentagon’s Section 1260H list—which identifies "Communist Chinese military companies" operating in the U.S.—initially included several high-profile additions. However, the Federal Register quickly replaced the posting with a "withdrawn" notice, stating an agency request for the reversal was received after public inspection. No official reason was provided for the sudden change.
Before the withdrawal, the updated list including tech giants Alibaba and Baidu electric vehicle manufacturer BYD biotech firm WuXi AppTec and robotics leader RoboSense. Memory chip makers YMTC and ChangXin Memory Technologies were notably removed from the roster.
While the 1260H list does not impose immediate sanctions, it effectively "soft-sanctions" firms by barring the Department of Defense from future contracts or procurement with them. It also serves as a warning to U.S. investors and suppliers.
The flip-flop caused a brief but sharp sell-off in Alibaba and Baidu shares. Both companies have categorically rejected the allegations, with an Alibaba spokesperson calling the inclusion "baseless" and threatening legal action.
The timing of the update is particularly sensitive. It comes as Washington and Beijing attempt to maintain a one-year trade truce reached between Presidents Donald Trump and Xi Jinping in October 2025.
With President Trump scheduled to visit China in April 2026, analysts suggest the retraction may be a move to avoid jeopardizing diplomatic progress or could simply be a significant administrative error.
