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Chinese technology and e-commerce giant Alibaba has filed a lawsuit against the United States government, challenging its inclusion on a Pentagon blacklist of companies allegedly linked to China’s military and calling the designation baseless and damaging.
The lawsuit, filed on Tuesday in a federal court in San Jose, California, seeks to overturn a decision by the US Department of Defense (DoD) to add Alibaba to its list of “Chinese military companies”, a designation that could restrict the company’s access to US government-related business and tarnish its reputation among American partners.
The legal challenge marks the latest flashpoint in the escalating technology and economic rivalry between the world’s two largest economies, as Washington intensifies scrutiny of Chinese companies over national security concerns.
Alibaba disputes military links
In its complaint, Alibaba argued that the Pentagon’s determination “has no basis in fact or law” and accused the US government of wrongly portraying the company as an arm of China’s military establishment.
“Alibaba is governed by an independent board, none of whom has any military affiliation,” the company said in the filing.
The company stressed that its businesses are focused on retail, logistics, cloud computing and enterprise technology services rather than military, intelligence or defence-related activities.
“Alibaba is not a Chinese military company nor part of any military-civil fusion strategy,” a company spokesperson said, adding that the firm was seeking removal from the blacklist through legal action.
Alibaba also argued that compliance with Chinese regulations should not be interpreted as evidence of military ties, noting that all multinational companies operating in China, including American firms, are required to follow local laws.
Why the Pentagon blacklisted Alibaba
The dispute stems from the Pentagon’s decision earlier this month to
expand its list of companies allegedly linked to China’s military. On June 8, the Department of Defense added Alibaba along with several major Chinese firms, including search engine giant Baidu, electric vehicle makers BYD and Nio, and biotechnology company WuXi AppTec.
The Pentagon accused Alibaba of being a “military-civil fusion contributor to the Chinese defence industrial base” because of its affiliation with China’s Ministry of Industry and Information Technology (MIIT). The department also cited indirect links between Alibaba and China’s state-owned Assets Supervision and Administration Commission (SASAC).
The blacklist, formally known as the Section 1260H list, now includes 188 Chinese companies, up from 134 last year, reflecting growing US concerns that Beijing could leverage private-sector innovation for military purposes.
A Pentagon spokesperson declined to comment on Alibaba’s lawsuit, saying the department does not discuss ongoing litigation.
Commercial consequences beyond sanctions
Although inclusion on the list does not trigger direct sanctions or asset freezes, it carries increasingly significant consequences.
Under US law, the Pentagon will be prohibited from contracting with blacklisted companies beginning later this month. Starting in 2027, the restrictions will expand to cover purchases made through third-party contractors.
Alibaba argues that the impact extends well beyond government contracts.
In its lawsuit, the company said the designation has already caused irreparable reputational harm and could discourage American companies from maintaining commercial relationships with the Chinese group.
“For many American businesses, Alibaba is the principal gateway to the Chinese market,” the complaint states. “To label Alibaba a ‘Chinese military company’ is to brand it an instrument of the Chinese military and a threat to US national security.”
The company warned that such a label casts doubt on its operations and risks undermining longstanding relationships with US customers, suppliers and advisers.
Claims of lack of due process
Alibaba also alleged that it was denied a fair opportunity to respond before being added to the blacklist.
According to the lawsuit, the company sought meetings with Pentagon officials and submitted information intended to address concerns about military links, including details of its economic contributions in the United States.
Despite those submissions, Alibaba said the Department of Defense neither requested additional information nor raised further concerns before designating the company.
Instead, the company claims it was placed on the blacklist “without notice or a fair hearing”.
Part of a broader US-China dispute
Alibaba’s lawsuit comes amid a broader deterioration in US-China technology relations, with Washington tightening restrictions on Chinese firms involved in sectors ranging from semiconductors and artificial intelligence to electric vehicles and biotechnology.
China has repeatedly
criticised such measures, arguing that they unfairly target Chinese companies under the guise of national security.
Following Alibaba’s designation earlier this month, China’s embassy in Washington accused the United States of discriminatory treatment and called for a fair and non-discriminatory business environment for Chinese companies operating overseas.
The outcome of Alibaba’s lawsuit could have implications not only for the company itself but also for other Chinese firms seeking to challenge US government efforts to curb their access to American markets and institutions.
With inputs from agencies.
