1260H List

The US Department of Defense, usually called the Pentagon, publishes a list of Chinese companies every year. It contains firms that, in the assessment of US authorities, work for the Chinese military. The unwieldy name comes from Section 1260H of a US law that mandates this publication. Officially, it is called the “Chinese Military Companies List.” It now contains over a hundred names, including major technology corporations such as smartphone and car manufacturer Xiaomi, memory chip producer CXMT, or battery maker CATL. Being placed on it does not bring punishment at first, only public naming.

What an entry means for a company

The list is not a sanction in the strict sense. American companies may continue to do business with the listed firms. Nevertheless, an entry has clear consequences because it acts like a warning sign. Banks, investors, and customers avoid companies that appear in a US military report. Several times, the stock prices of affected corporations fell immediately after publication.

Starting in June 2026, things will become more concrete. From then on, the US military will no longer be allowed to procure goods or services from companies on the list, not even through suppliers. For a company like CATL, whose batteries are found in many products, this is a serious problem. In addition, other agencies use the list as a starting point for actual trade bans.

That is why several companies are fighting back legally. Smartphone maker Xiaomi and laser specialist Hesai sued in US courts and were removed from the list again. The courts demanded evidence, not just assumptions. This shows that the list is a political instrument whose reasoning is not always watertight.

How the Pentagon compiles the names

The basis is a law through which the US Congress passes the defense budget every year. Section 1260H of this law obliges the Pentagon to name Chinese military companies and to keep updating the list continuously. The main criterion examined is whether a company develops technology that is also militarily useful. It also counts whether it belongs to a state-owned arms conglomerate or is regarded by authorities as a partner of the armed forces.

An important concept behind this is civil-military fusion. This refers to China’s strategy of deliberately intertwining civilian research and armament. A chip for smartphones can also be found in a drone. It is precisely this dual use that makes classification difficult, because a clear line between civilian and military often does not exist.

It is important to distinguish this from other US lists. The so-called Entity List of the Department of Commerce bans exports to certain companies and takes effect immediately. The 1260H List, by contrast, initially only informs. Many corporations appear on both lists, which is easily confused in news reports.

The list in the news and in the tech sector

The names usually appear in business news in January, when the new version is released. Reports then cover which corporations are newly added and which are removed. This is relevant for investors because affected stocks fluctuate. For journalists, the list is a gauge of how tough the US is acting toward China.

AI technology is a particularly frequent topic in this context. The list includes providers of facial recognition, manufacturers of laser sensors for self-driving cars, and companies producing memory chips needed for training large AI models. As such, it is a window into the technology conflict between the two countries.

European companies also pay close attention. Anyone with a supplier on the list risks trouble when doing business with US authorities. A common misconception is that the listed companies are weapons manufacturers. Most of them make perfectly ordinary products that, from the US perspective, simply also have military applications.