Alibaba has filed a lawsuit against the U.S. Department of Defense, challenging its designation as a "Chinese military company." The tech conglomerate seeks to be removed from a Pentagon list that bars companies from obtaining U.S. defense contracts and carries significant reputational damage.
The petition, filed in the U.S. District Court for the Northern District of California, asserts that the designation, which was announced on June 8, lacks factual and legal basis and was not reached through a fair process. Alibaba, which is publicly traded on the New York Stock Exchange, stated in its filing that the label has already caused substantial harm and will continue to do so, emphasizing its reliance on the trust of its U.S. partners.
This lawsuit is one of several by Chinese companies challenging national security labels imposed by the Pentagon. In 2021, Congress mandated the creation of a list identifying Chinese companies believed to be controlled by the country's military and security forces or to have contributed to its defense industrial base. The current list encompasses 188 entities, including state-owned defense firms and private technology companies like Alibaba and robotics firm Unitree.
The designations have faced opposition from both the Chinese government and the targeted companies. On Monday, Beijing announced sanctions against 10 American military-related companies, a move that could escalate tensions between the two nations as they attempt to stabilize relations.
Another company, WuXi AppTec, which provides research, development, and manufacturing services to the U.S. pharmaceutical and life sciences sectors, was also added to the list. The Pentagon claims WuXi AppTec is indirectly owned by China's state-owned Assets Supervision and Administration Commission and affiliated with the State Administration of Science, Technology and Industry for National Defense and the People's Liberation Army. WuXi AppTec is contesting this designation in the federal district court in the District of Columbia, arguing it is the "product of political pressure and inaccurate, unsupported assertions."
The Pentagon maintains that Alibaba is affiliated with China's Assets Supervision and Administration Commission and contributes to the nation's industrial defense complex through its connection with China's Ministry of Industry and Information Technology. However, Alibaba's petition contends that it operates under an independent board, holds no military certification or license, and has no direct relationship with the Assets Supervision and Administration Commission. The company also stated that compliance with the Ministry of Industry and Information Technology is mandatory for all companies operating in China, including U.S. firms, and that "a regulator is not an affiliate."
In a previous case, a U.S. judge ruled against DJI Technology, a Chinese drone maker, in its attempt to be removed from the Pentagon's list. DJI is currently appealing that decision.