Alibaba filed a federal lawsuit on June 23, asking a court to remove it from the Pentagon’s Section 1260H list of companies the department says have ties to China’s military. In its complaint, Alibaba said the Pentagon lacked sufficient evidence to classify it as a Chinese military company and failed to properly consider evidence disputing the alleged ties. The company said the new lobbying restriction had already prompted several firms and individual lobbyists to indicate they would end their relationships with the company.
Over the past week, Alibaba lost five lobbying firms and Tencent lost four, according to public disclosures and Bloomberg. Influential Washington lobbying firms including Brownstein Hyatt Farber Schreck, Mercury Public Affairs and MO Strategies filed disclosures Monday confirming they had ended their representation. MO Strategies said in a filing it would comply fully with the new Defense Department requirements.
The provision driving the disengagement is Section 851 of the fiscal 2025 National Defense Authorization Act, which took effect June 30. It bars the Pentagon from awarding contracts to any company that employs a lobbyist who also works for a Chinese entity on the Pentagon’s Section 1260H list. The law does not directly prohibit lobbying firms from representing Chinese companies, but the contracting restriction creates a mandatory choice for firms seeking to keep defense clients.
The Pentagon’s Section 1260H list, established under the fiscal 2021 National Defense Authorization Act, identifies companies the department considers affiliated with China’s military or contributors to Beijing’s military-civil fusion strategy. The Pentagon added Alibaba and dozens of other companies to the list in an update published June 8. Tencent appeared on an earlier version and remained designated in the June update.
Alibaba has denied that it works with the Chinese military or participates in China’s military-civil fusion strategy. Tencent has also denied military links.
The expanded list and the new contracting rule are likely to increase compliance reviews among Washington lobbying firms, law firms, consultants and defense contractors, according to the report. Companies seeking Pentagon contracts may need to determine whether outside advisers represent any listed Chinese entities, even when those advisers’ work for the U.S. company is unrelated to national defense. The development also narrows Chinese companies’ access to experienced lobbyists as they seek to challenge expanding trade, investment and national security restrictions in Washington.