Alibaba sues US Department of Defense to overturn 'Chinese military company' designation

The blacklist expansion

The Pentagon added Alibaba to its list of "Chinese military companies" on 8 June, expanding the roster to 188 entities. The Department of Defense accused the Hangzhou-based firm of being a "military-civil fusion contributor to the Chinese defence industrial base" because of its affiliation with China's Ministry of Industry and Information Technology (MIIT) and an indirect link to the state asset regulator SASAC. The move reflects Washington's concern that the Chinese military could tap private-sector technology and innovation.

Other prominent names blacklisted this month include internet search company Baidu, electric vehicle makers BYD and Nio, and biotech firm WuXi AppTec. WuXi filed a similar lawsuit against the US government on 11 June. The blacklisting does not constitute formal sanctions, but it will bar the Pentagon from contracting with the companies starting on 30 June, and from purchasing their goods or services through third parties from 2027.

Alibaba fights back

In its federal court complaint, Alibaba argued that the determinations "have no basis in fact or law." The company pointed to its independent board, noting that none of its members have any military affiliation, and stressed that its platforms are built for retail, logistics, and enterprise IT, not weapons or intelligence. Alibaba also highlighted that every multinational operating in China, including American firms, must follow the same local rules.

“The determinations have no basis in fact or law. Alibaba is governed by an independent board, none of whom has any military affiliation. Its products and services are built for retail, logistics, and enterprise information technology -- not weapons, defence, or intelligence.”

The lawsuit seeks a court order removing the company from the blacklist and says the designation has already caused irreparable harm. Alibaba described the action as arbitrary and capricious, adding that the Pentagon did not provide notice or a fair hearing. The Department of Defense declined to comment, citing the ongoing litigation.

China retaliates with export curbs

On Monday, China imposed export restrictions on 10 US companies operating in defence and rare earth mining, a direct response to Washington's blacklist. The Chinese embassy in Washington called the designations "discriminatory" and urged the US to stop what it termed a wrong practice.

“Chinese companies that do business overseas have been strictly observing laws and regulations of their host countries. The US should stop its wrong practice and create a fair, just and non-discriminatory environment for Chinese companies.”

Legal and commercial fallout

The blacklisting triggers a severe operational penalty from 30 June, when the Pentagon is banned from any new contracts with listed firms. Crucially, the law also extends to US contractors that share lobbyists or law firms with a blacklisted entity. Alibaba argues this creates a functional blockade, severing its political and legal voice in Washington at the very moment it needs to defend itself. The company said the label directly impugns its reputation and casts a shadow over every US relationship it maintains.

Alibaba noted that major US financial institutions, including J.P. Morgan, Citigroup and BlackRock, dominate its shareholder base, underscoring its integration with the American financial system. The lawsuit is the latest flashpoint in an escalating US-China tech conflict that is increasingly fought through designations, export controls and court challenges.