Alibaba sues the U.S. Defense Department in a bid to remove ‘Chinese military company’ designation

FILE - The logo of Chinese technology firm Alibaba is seen at its office in Beijing, Tuesday, Aug. 10, 2021. (AP Photo/Mark Schiefelbein, File)

WASHINGTON — The Chinese tech giant Alibaba has sued the U.S. Department of Defense, demanding that it be removed from the Pentagon’s list of Chinese military companies that prohibits them from landing U.S. defence contracts and carries reputational damage.

In the petition filed this week in the San Jose division of the U.S. District Court in the Northern District of California, Alibaba, which is publicly traded on the New York Stock Exchange, argued that the designation, announced on June 8, has “no basis in fact or law” and that the Pentagon failed to reach its conclusion through any fair process.

It is the latest lawsuit by a Chinese company against the Pentagon over such national security labels.

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In 2021, with some in Washington seeing China as a growing military threat, Congress asked the department to create a list of Chinese companies directly controlled by the Chinese military and security forces, as well as those it believed had contributed to the country’s defence industrial base.

The current list includes 188 entities ranging from state-owned defence businesses, to private-sector tech companies like Alibaba and the robotics company Unitree. The designations have drawn protests from both the Chinese government and some of the targeted companies.

On Monday, Beijing announced sanctions on 10 American military-related companies, raising the risk of elevating tensions between the two countries at a time when Beijing and Washington are seeking to stabilize relations.

WuXi AppTec Co., a company that provides research, development and manufacturing services to hundreds of U.S. pharmaceutical and life sciences companies, has also been added to the list. According to the Pentagon, the company is “indirectly owned” by China’s state-owned Assets Supervision and Administration Commission. The Pentagon says it’s also “indirectly affiliated” with the State Administration of Science, Technology and Industry for National Defense and the People’s Liberation Army.

WuXi AppTec is challenging the decision in the federal district court in the District of Columbia. In the petition filed on June 11, the company said the label has “already caused and will continue to cause several and irreparable harms.” It called the designation “the product of political pressure and inaccurate, unsupported assertions.”

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In a petition Tuesday, Alibaba said the company is losing backers in the U.S. and that the damage is significant because the company depends on the trust of its U.S. partners.

The Pentagon asserts that Alibaba not only is affiliated with the China’s Assets Supervision and Administration Commission, but that it contributes to the nation’s industrial defence complex through its affiliation with China’s Ministry of Industry and Information Technology.

Alibaba said in its petition that it is governed by an independent board and holds no military certification or license. The company has no relationship with the Assets Supervision and Administration Commission, it said, and that like all companies operating in China, including U.S. companies, regulatory compliance with the ministry is mandatory.

“A regulator is not an affiliate,” reads the petition.

A U.S. judge last year ruled against DJI Technology, a Chinese drone maker, in its bid to be removed from the Pentagon’s list. DJI is appealing the case.

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Didi Tang, The Associated Press

AP Business Writer Chan Ho-him in Hong Kong contributed