Pentagon blacklisted another round of Chinese tech firms this week, adding Alibaba, Baidu, and others to its list of companies with alleged Chinese military ties. Beijing fired back within hours: the commerce ministry placed ten U.S. defense contractors on an export-control list, barring dual-use products made in China from reaching the United States; the finance ministry then excluded forty-six U.S. companies, mostly defense firms, from Chinese government procurement. Both sets of restrictions took effect the same day they were announced. Now, I’m just a simple man, but from where I sat in the gunner’s seat I can tell you this: no blacklist ever solved a factory problem. And the Pentagon’s list has become a weapon — a weapon aimed at companies that have no actual military role, and that is now being fired back by Beijing at American defense contractors who do.
The list-building exercise is running in both directions now, as the trade dispute has accelerated into tit-for-tat escalation. But what the lists do not touch is the supply chain that runs through both capitals. From the counter service’s whiteboard in my auto shop, the answer doesn’t change when you look at what holds the building up — the same bin of parts that both mechanics reach for. Washington and Beijing are building lists while the supply chains that run through both capitals remain unchanged. That is what passes for great-power competition in 2026, and it does not pencil out as actual strategy.
Rare earths illustrate the contradiction. Neodymium, dysprosium, terbium and related elements make precision magnets in the guidance, targeting and communications systems the contractors on both lists depend on. Seventy to eighty percent of rare-earth refining still runs through Chinese facilities — some recent estimates put the figure higher, well above ninety percent for refined output. The PRC holds effective monopoly on that refining capacity. Finding alternative suppliers takes five to ten years, hundreds of millions of dollars in infrastructure, and permitting and capital commitments neither government has made. These are the nuts and bolts in your guidance stack and the precision alloys in your airframe. These are the materials soldiers depend on to bring their crews home. No blacklist on either side touches the fact that they still run through the contested point of manufacture. The symbol and the reality run in opposite directions: the list says interdiction; the supply chain says interdependence. The parts bin is still in the back room of the shop on the other side of the street.
The Pentagon’s list of Chinese military-linked companies operates under Section 1260H of the National Defense Authorization Act for Fiscal Year 2021. The statute directs the Secretary of Defense to identify entities that are “directly or indirectly owned, controlled, or beneficially owned by” the People’s Liberation Army, or that are acting as an agent of or on behalf of the PLA or organizations under the Central Military Commission — a definition broad enough to capture any commercial enterprise with a PLA connection, however indirect. The practical effect is a prohibition on doing business with the U.S. military. It is not a sanctions list. It is not an export-control list. It is a procurement restriction — a notice to the defense acquisition system that the named companies are off-limits for U.S. military contracts.
The problem is what happens when a list designed for procurement restrictions becomes a list treated as a general designation of threat. The Pentagon’s list has no statutory mechanism for a company to contest its inclusion, no published evidentiary standard for what counts as “indirect” ownership or control by the PLA, and no independent review. A company is placed on it; a company is on it. That is the entire process. The reputational damage the Journal notes — lost sales to other U.S. government agencies, lost American consumer business — is not an incidental byproduct. It is the list’s second function, and it is operating exactly as designed.
Alibaba and Baidu are the test cases for what this list actually does. Alibaba is an e-commerce and cloud-computing company; its business is retail, logistics, and enterprise computing, not defense contracting. Baidu is a search-engine and artificial-intelligence company. Neither builds weapons. Neither operates military bases. Neither is a defense contractor in any meaningful sense of the term. But both are on the Section 1260H list, and the Journal’s reporting makes clear that their inclusion is what Beijing is now retaliating against — not a specific U.S. military action, not a specific U.S. sanctions designation, but the list itself.
The Chinese retaliation targets U.S. defense contractors. That is a rational choice from Beijing’s perspective: the U.S. government has put Chinese commercial technology companies on a list of military-linked entities; China responds by putting U.S. military contractors on an equivalent list. But the equivalence is false. The 10 U.S. companies on China’s new export-control list are defense contractors, and the 46 on its procurement ban are, by the Journal’s account, mostly defense contractors. They build weapons. They sell to the Pentagon. They have a demonstrable, documentable, public relationship with the U.S. military. The Chinese companies on the Pentagon’s list, by contrast, are commercial technology firms whose relationship with the PLA the U.S. government has never publicly documented. The Pentagon’s list does not distinguish between companies that are defense contractors and companies that are in the same country as a defense contractor. The Chinese list does.
This is not a procedural accident. Beijing is making an argument through the structure of its retaliation: by targeting companies with a demonstrable military relationship, China is implicitly asserting that a legitimate designation requires an evidentiary link between the named entity and military activity. The U.S. list, by its own structure, cannot meet the standard that China’s retaliation now imposes on it. That is strategic norm-setting, not mere tit-for-tat. The retaliation is also not an isolated move. Beijing has been systematically restricting outward-bound capital and technology flows for months — tightening outbound investment rules in early June, and now imposing export controls and procurement bans on U.S. companies. The list retaliation is not a sudden escalation. It is the third leg of a counterstrategy that was already in motion.
Eisenhower warned in his farewell address, paragraph 26, that “the prospect of domination of the nation’s scholars by Federal employment, project allocations, and the power of money is ever present and is gravely to be regarded.” Sixty-five years later, neither government has restructured the supply chain behind the military-industrial complex. The list-building gesture is the physical embodiment of what he named: both governments appeasing constituencies with symbolic harbors while the material dependencies underlying the entire apparatus sit undisturbed. The interdependence is now decades old, bending to no list and no naval deployment.
Walzer, in Just and Unjust Wars, Chapter 3, makes a claim about categories that applies far beyond the battlefield. He argues that moral reasoning about war must begin with the specific acts that constitute it, not with the abstract categories that are used to justify it. A category like “military necessity” cannot do moral work unless it is tested against the specific facts of the action it is used to defend. The Section 1260H list fails exactly this test. It applies an abstract category — “military-linked” — to specific companies, and then lets the category do all the work. The Pentagon has never published the evidence that Alibaba meets the statutory test of being owned, controlled by, or acting as an agent of the PLA. The Pentagon has never published the evidence that Baidu meets it. The category is the entire substance of the designation. The companies are the casualties of the category.
Bacevich, in Washington Rules, Chapter 2 on the permanent-war consensus, explains why this list is not a one-administration phenomenon. The Section 1260H list was created by the 2021 NDAA under the first Trump administration and expanded under Biden and the second Trump administration. The Chinese retaliation is a response to a list that has been maintained and expanded across three administrations, two parties, and two changes in control of the White House. The list is not a partisan project. It is a permanent-war-consensus project. The companies on both sides are the ones who pay for the consensus.
The Pentagon’s list is a procurement restriction. China’s retaliation has made it an economic weapon. The companies caught in the middle — Alibaba, Baidu, and the 46 U.S. companies, mostly defense contractors, now barred from Chinese government procurement — are not the intended targets of either government’s policy. They are the incidental casualties of a designation system that was designed without procedural safeguards, that operates without public evidence, and that is now being deployed as a weapon in a trade war the list was never supposed to fight. The reader who wants to know what the Section 1260H list actually does should look at what happened Monday: the Pentagon put Alibaba on a list; China put Lockheed Martin on a list; and the American commercial relationship with Chinese technology companies is now being regulated by a procurement restriction that carries the force of a sanctions designation without any of the legal or evidentiary safeguards that sanctions designations require.
That is not what the list was for. But it is what the list has become. And the companies on both sides are the ones left holding the invoice.