China targets dozens of U.S. firms in retaliation for Pentagon blacklist

China imposed new trade restrictions on dozens of U.S. entities on Monday in retaliation for Washington’s move to add more Chinese companies to the Pentagon’s list of businesses it accuses of aiding Beijing’s military.

on monday, Chinese Ministry of Commerce resettles 10 Americans industrial suppliers on the export control list, including rare earth miners MP Materials Company And USA Rare Earthand drone manufacturers Teal Drones and Jaia Robotics, banning the export of any dual-use products originating from China to these companies.

Other companies on the list include California-based electronics manufacturer Aveox Inc, Ball Aerospace & Technologies Corp and military equipment provider Oshkosh Defense.

In a separate statement China’s Ministry of Finance on Monday barred 46 US companies, mostly defense contractors, from participating in government procurement projects. Foreign-funded, locally registered entities associated with excluded firms are exempt.

The actions come after the Pentagon updated its so-called 1260H list earlier this month, adding a number of Chinese technology companies to the list of organizations it believes are aiding Beijing’s military. Alibaba Group, baidu and car manufacturer BYD It was among the last additions.

Han Shen Lin, China country director for consultancy The Asia Group, said Beijing’s countermeasures appeared largely symbolic rather than a serious escalation in U.S.-China relations because most of the targeted companies “have little or no meaningful business activity in China.”

The 1260H designation does not impose immediate sanctions, but prohibits the U.S. Department of Defense from awarding direct contracts to affected companies starting June 30, followed by restrictions on indirect procurement starting in 2027. The designation is likely to deter other federal agencies and trading partners from doing business with publicly traded companies.

Chinese officials responded earlier this monthStating that they will take all necessary measures to protect the “legitimate and legal rights and interests” of Chinese companies, the Minister criticized the USA for “preparing discriminatory lists under the pretext of national security”.

The latest countermeasures provide a “model example” of how China will deal with moderate tensions from the United States and keep the relationship stable more broadly, said Dan Wang, Eurasia Group’s China director, adding that last month’s Trump-Xi summit reset relations on a more positive footing.

Analysts say the Pentagon’s move is largely symbolic but shows how broadly Washington draws the line around sensitive Chinese technology, from artificial intelligence to consumer electronics and biotechnology.

Several identified Chinese companies have objected to the designations, while promising legal action to have them removed. Chinese smartphone maker Xiaomi won a court case in May 2021 that resulted in the removal of its name.