US Adds Alibaba and Baidu to List of Chinese Military Affiliates

The United States Department of Defence, or the Pentagon, has added e-commerce company Alibaba and internet services firm Baidu to a list of companies it deems to have ties to the Chinese military. Inclusion on the list, published on Tuesday local time, does not mean the US government will immediately impose sanctions on either company. However, this status prevents the Pentagon from directly signing contracts with the companies, or from using their products and services through third parties. The policy could potentially impact Alibaba and Baidu’s business opportunities, as several contractors working with the Pentagon may choose to stop using their products or services.

In addition to Alibaba and Baidu, a number of Chinese semiconductor companies were also added to the Pentagon list, including memory chip makers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Co. (YMTC). The Pentagon had actually published an update to this list last February. However, that list was subsequently withdrawn ahead of US President Donald Trump’s visit to Beijing in May to meet Chinese President Xi Jinping.

At the same time, two US senators, one Republican and one Democrat, were reported to be urging the Trump administration to tighten restrictions on the semiconductor industry related to Chinese companies. They proposed that overseas subsidiaries of Chinese companies should not be able to order custom chips from semiconductor manufacturers like Taiwan Semiconductor Manufacturing Company (TSMC). Taiwan is also reportedly considering policies aligned with the technology export restrictions imposed by the United States. The Taiwanese government is said to be reviewing rules to restrict the sale of artificial intelligence (AI) chips to all customers from China. If such a policy is implemented, Chinese companies will find it difficult to obtain the high-performance AI chips used in the development of artificial intelligence technology.