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On the Pentagon’s recently updated list of “Chinese military companies,” several entries seem strangely out of place. A few lines above the Aviation Industry Corporation of China (AVIC), the state-owned conglomerate that builds the country’s fighter jets, now sits the e-commerce giant Alibaba, for instance.

AVIC has appeared on every version of the list since the first was published in June 2021. Its placement is irrefutable. It is “directly owned and controlled” by China’s state asset regulator. The Pentagon’s two-sentence rationale for why Alibaba is a “military-civil fusion contributor to the Chinese defense industrial base” is much flimsier. It is, allegedly, “indirectly affiliated” with that same asset regulator and “affiliated” with China’s technology ministry. The Pentagon cites no military customer, no defense contract, and no specific conduct whatsoever. Alibaba rejected the designation and promised legal action.

On the Pentagon’s recently updated list of “Chinese military companies,” several entries seem strangely out of place. A few lines above the Aviation Industry Corporation of China (AVIC), the state-owned conglomerate that builds the country’s fighter jets, now sits the e-commerce giant Alibaba, for instance.

AVIC has appeared on every version of the list since the first was published in June 2021. Its placement is irrefutable. It is “directly owned and controlled” by China’s state asset regulator. The Pentagon’s two-sentence rationale for why Alibaba is a “military-civil fusion contributor to the Chinese defense industrial base” is much flimsier. It is, allegedly, “indirectly affiliated” with that same asset regulator and “affiliated” with China’s technology ministry. The Pentagon cites no military customer, no defense contract, and no specific conduct whatsoever. Alibaba rejected the designation and promised legal action.

Uncomfortably, for both the Pentagon and the Chinese companies newly on its blacklist (including the tech company Baidu and the car-making conglomerate BYD), there’s truth to both the designations and the denials. At one time, Washington understood this nuance. In December 2024, Congress amended the statute behind the list, Section 1260H, to capture China’s military-civil fusion system as it actually operates: an incentive architecture rather than a direct chain of command. Then, however, it crammed that correct diagnosis into a company-by-company blacklist, an instrument the diagnosis does not fit. With a Pentagon contracting ban taking effect on June 30 and Chinese President Xi Jinping scheduled to visit Washington in September, the cost of the mismatch is coming due.

In China,........

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