The Defense Department’s updated 1260H list, published Monday, classified dozens of new companies and their subsidiaries, including e-commerce giants Alibaba and Baidu, and the electric vehicle manufacturer — and major Tesla rival — BYD, as “Chinese military companies operating in the United States.” The listing doesn’t bar them from operating in the U.S., but it prohibits them from doing business with the Pentagon and imposes a reputational stigma at a time of rising concerns about Chinese espionage operations. The intelligence agencies of Britain, the U.S., Canada, Australia and New Zealand warned last week that China is increasingly using professional networking sites and job platforms — including LinkedIn and Indeed — to gain access to classified information.
The tensions over the Pentagon’s Chinese military company list underscore the Trump administration’s challenge in maintaining what Secretary of State Marco Rubio describes as “strategic stability” with China while countering Beijing’s perceived threats to national security. The administration has demonstrated its willingness to yield to Beijing’s sensitivities in some areas — such as Trump’s apparent willingness to delay approval of a $14 billion arms sale to Taiwan — without pulling its punches against alleged Chinese espionage dangers.
That dynamic could complicate Trump’s efforts to restore normal U.S.-China trade ties battered by the tit-for-tat tariff war that Washington and Beijing waged against each other last year. Trump hailed the results of his May summit with Xi, in which the latter pledged to buy 200 Boeing aircraft and “billions of dollars” in U.S. soybeans. During that Beijing meeting, Trump announced he’d invited Xi to a state visit in Washington in September — at which many of the same topics will undoubtedly be relitigated.