China’s Ministry of Commerce on Monday added 10 U.S. entities to its export control list and the Finance Ministry barred 46 American companies from government procurement, with both measures taking effect immediately. The action responds to the Pentagon’s June 8 expansion of its 1260H roster of Chinese military-linked firms from 134 to 188 designated entities.

The targeted list reads like a defense-industrial directory: Aveox, Red Cat Holdings, Teal Drones, IMSAR, Jaia Robotics, Ball Aerospace & Technologies, Oshkosh Defense, L3Harris Maritime Services, and, most pointedly, rare earth producers MP Materials and USA Rare Earth. Beijing’s curbs halt Chinese dual-use exports to the listed firms and require current export activity to cease. The Commerce Ministry framed the measures as a defense against “the U.S. government’s malicious practice,” invoking national security and non-proliferation obligations.

“Most of the companies are US defence industry players or they have close connections with the US government… Those companies are not going to do business in China, so the impact will be quite symbolic,” said George Chen, partner for Greater China at the Asia Group, who called the action a “proportionate response” to the 1260H list.

That symbolism is the point. The rare-earth designations sting because they target the only domestic supply chain Washington has spent years subsidizing. Pentagon contracting with listed Chinese firms, including Baidu, BYD, NIO, Tencent, WuXi AppTec, Unitree Robotics, and memory chipmakers YMTC and CXMT, is barred from June 30, with procurement restrictions expanding in 2027.

On Tuesday, Alibaba sued the Department of Defense in the U.S. District Court for the Northern District of California, seeking removal from the 1260H list. The lawsuit reframes a designation Beijing treats as casus belli into something the American legal system has to adjudicate on its own terms. Decoupling, it turns out, generates its own jurisprudence.

Sources