Updated Pentagon List Targets China’s Military-Civil Fusion Program

The Pentagon just fired a warning shot at Beijing — and Wall Street.

On June 8, the Pentagon released its updated Section 1260H list, which designates Chinese companies as supporting Beijing’s military-civil fusion program. It now includes major publicly traded Chinese technology firms such as Alibaba, Baidu, and BYD. In response to its release, Rep. John Moolennar (R-MI2), chairman of the House China Select Committee, called the designations “a warning to American businesses, all levels of government, and the American people.”

The administration had initially released the congressionally-mandated list in February, then quickly pulled it ahead of President Donald Trump’s visit to Beijing in May — a meeting aimed at stabilizing the U.S.-China commercial relationship.

While a 1260H designation does not carry immediate commercial implications for these firms, the unveiling of these designations sends a signal that neither China’s military-civil fusion program nor Washington’s technological competition with Beijing are on pause following Trump’s summit with China’s paramount leader Xi Jinping.

Update Includes Major Chinese AI and Tech Firms

The updated list added two of China’s largest AI firms, Alibaba and Baidu, due to their connections to both the Chinese Ministry of Industry and Information Technology (MIIT) and the State-Owned Assets Supervision and Administration Commission of the State Council, the government entity that manages Beijing’s state-owned firms. The White House had previously accused Alibaba in November 2025 of cooperating with the Chinese military to identify cybersecurity vulnerabilities in U.S. networks, while Baidu remains one of Beijing’s national AI champions.

The list now also includes several firms involved in Chinese military robotics, including Unitree and RoboSense, a major sensor manufacturer. In its March filings to the Shanghai Stock Exchange, Unitree acknowledged that it had received funding from sources connected to the Chinese military, while RoboSense likely provides sensor units to Chinese unmanned robotic “wolves” used in recent amphibious landing exercises. 

Beijing Remains Committed to Military-Civil Fusion

The expanded list highlights Beijing’s growing commitment to military-civil fusion, particularly as the Chinese military seeks to transition towards an “intelligentized” force capable of effectively integrating emerging technologies into its military industrial base.

In March 2025,  Xi  and senior military officials announced plans for greater investment in the country’s military industrial base, including dual-use research into cyberwarfare capabilities, undersea systems, and autonomous weapons platforms. These measures were reinforced in the March 2026 release of Beijing’s 15th Five-Year Plan, which focused on merging “new quality productive forces,” China’s high-tech manufacturing sector, with “new-type combat capabilities” to achieve “national strategic integration” between the country’s military and industrial base.

These efforts have increasingly shaped the next generation of Chinese military platforms unveiled over the past two years. In September 2025, the Chinese military unveiled a range of new combat platforms, including LiDAR-equipped main battle tanks, heavily armed and tracked ground robots, and robotic wolves that can act autonomously on the battlefield. Beijing has also sought to integrate AI into its military platforms, including running DeepSeek within its military hospital network and developing greater computing resources for units working on nuclear weapons, cyberattacks, and war games.

Washington Should Pair Listing With Stronger Trade Measures

The 1260H designation is a warning signal, not a solution to China’s military-civil fusion strategy. Without follow-on action, Beijing and U.S. investors will read restraint as permission while continuing to trade these firms as part of retail investor portfolios.

The administration should take deliberate actions on three fronts.

First, designated firms that produce communications equipment or services, such as RoboSense, should be considered for possible addition to the Federal Communications Commission’s Covered List, triggering additional U.S. procurement restrictions.

Second, the Commerce Department should open a formal investigation into whether firms such as Unitree meet the threshold for Entity List designations, a tool that would cut off access to U.S. technology and supply chains.

Finally, the administration should provide guidance to index providers like MSCI and S&P on the risks of including 1260H companies in benchmark indices.

Jack Burnham is a senior research analyst in the China Program at the Foundation for Defense of Democracies (FDD). Daniel Swift is a senior research analyst at FDD and a retired U.S. diplomat. For more analysis from the authors and FDD, please subscribe HERE. Follow FDD on X @FDD. Follow Jack on X @JackBurnham802. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.