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On June 8, 2026, the U.S. Department of Defense (DOD) published an updated list of “Chinese military companies” operating in the United States as required by Section 1260H of the National Defense Authorization Act (NDAA) for Fiscal Year 2021 (the 1260H List), which was last published on January 7, 2025.[1] The updated list adds dozens of entities, including some of the largest publicly traded companies in China, spanning the automotive and electric vehicle, e-commerce, artificial intelligence, robotics, semiconductors, solar technology, and biotechnology sectors. These additions continue the trend of a steady expansion of the 1260H List from traditional defense and state-owned enterprises.[2] The updated 1260H List now identifies nearly 200 entities, including a number of subsidiaries listed alongside their parent companies. Notable new additions include BYD, NIO, Alibaba, Baidu, Unitree, TP-Link, and WuXi AppTec.[3] The update also removed 10 entities from the prior list.

Under Section 805 of the 2024 NDAA, DOD is generally prohibited from entering into, renewing, or extending contracts for the procurement of goods, services, or technology with entities designated on the 1260H List or controlled by listed entities. This prohibition on direct contracting takes effect on June 30, 2026, but as a practical matter, its immediate impact may be limited given the nature of the entities on the current list. As discussed in greater detail below, inclusion on the 1260H List also raises the possibility for a company to be subject to additional restrictions under other U.S. national security-related regulatory regimes.

Background

Section 1260H requires DOD to identify entities that qualify as “Chinese military companies” that are “operating directly or indirectly” in the United States. Section 1260H directs DOD to designate entities owned or controlled by the Chinese government and its military bodies, as well as entities identified as contributors to China’s military-civil fusion strategy.[4] The definition also includes any entity that owns, directly or indirectly, 50 percent or more of an entity that itself qualifies as a “Chinese military company,” meaning that the DOD can designate parent entities based on their subsidiaries’ activities.

Regulatory Significance

Inclusion on the 1260H List does not prohibit all activities with or relating to designated entities. However, over the past few years, the 1260H List increasingly has been integrated into U.S. regulatory regimes that can carry legal and practical consequences for listed entities and their counterparties, including:

• DOD Contracting Prohibition. As noted above, Section 805 of the 2024 NDAA prohibits DOD from entering into, renewing, or extending contracts for the procurement of goods, services, or technology with entities on the 1260H List or any entity subject to their “control” as defined under the Committee on Foreign Investment in the United States (CFIUS) regulations (31 C.F.R. § 800.208), subject to certain exceptions.[5] The prohibition on direct contracting takes effect on June 30, 2026. A broader restriction takes effect on June 30, 2027, under which DOD is prohibited from entering into contracts for the procurement of goods or services that include goods or services produced or developed by a listed entity, even when such goods or services are procured indirectly through a contractor’s supply chain. The prohibition applies only to DOD contracts and does not extend to other federal agency procurement.

• BIOSECURE Act. The BIOSECURE Act, enacted as part of the 2026 NDAA,[6] directs the Office of Management and Budget (OMB) to include on its list of “biotechnology companies of concern” any entity on the 1260H List that is active in biotechnology. Once the BIOSECURE Act’s restrictions take effect, which will follow a multi-step implementation process expected to conclude in approximately mid-to-late 2028, U.S. federal agencies would be prohibited from procuring biotechnology equipment or services from designated companies and from entering into contracts, subcontracts, grants, or loans with such companies or with any companies that use biotechnology equipment or services from designated companies. For newly listed entities operating in the biotechnology sector, a 1260H designation is expected to result in the loss of access to U.S. federal contracts, grants, and research funding, as well as the possible disruption of relationships with other companies that depend on federal funding.[7]

• Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List).[8] The COINS Act, enacted as part of the 2026 NDAA,[9] requires the President to report to Congress every two years on whether any entity on the 1260H List qualifies for inclusion on the Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List) maintained by the U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC). U.S. persons are prohibited from purchasing or selling publicly traded securities of NS-CMIC designated companies, as well as any publicly traded securities that are derivative of, or designed to provide investment exposure to, such securities. In short, the COINS Act raises the possibility that entities on the 1260H List will be designated on the NS-CMIC List. Several of the newly listed entities have publicly traded securities, including BYD, NIO, Alibaba, and Baidu, each of which has American depositary shares or receipts available to U.S. investors, as well as WuXi AppTec, which is listed on the Hong Kong and Shanghai exchanges.[10]

• CFIUS Known Investor Program. In February 2026, the U.S. Department of the Treasury issued a Request for Information regarding a proposed Known Investor Program under which frequent foreign investors could voluntarily submit information to CFIUS in advance of a formal filing, with the goal of enabling CFIUS to review subsequent transactions more efficiently. Under the current proposal, a foreign investor would be disqualified from participating in the program if it, or its parent, is identified on the 1260H List or if any entity on the 1260H List holds a greater than 10 percent interest, directly or indirectly, in the foreign investor, or holds the right to appoint a member of its board of directors or equivalent governing body. Notably, a foreign investor would also be excluded if it uses or incorporates into products or services provided to third parties, components, equipment, or infrastructure sourced from entities on the 1260H List. The expansion of the 1260H List thus significantly broadens the scope of commercial relationships that could disqualify a foreign investor from the program.[11]

Key Takeaways

The updated 1260H List is notable both for the volume and the prominence of the new additions. The inclusion of major publicly traded companies across multiple sectors signals a continued broadening of the scope of entities that the U.S. government considers to have ties to China’s military-industrial base, extending well beyond traditional defense contractors to include e-commerce, internet services, artificial intelligence, electric vehicles, robotics, and other technology sectors.

Companies and investors should evaluate their exposure to newly listed entities across each of the regulatory frameworks discussed above. More broadly, entities with securities holdings, biotechnology procurement relationships, or foreign investment activity relating to newly listed companies should review their compliance programs and monitor forthcoming regulatory developments, including potential NS-CMIC designations, BIOSECURE Act implementing regulations, and the finalization of the CFIUS Known Investor Program.

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Cleary’s foreign investment and national security team is monitoring developments related to the updated 1260H List and is available to assist clients in evaluating the potential impact on their investments, transactions, and compliance programs.

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[1] DOD published an updated 1260H List in February 2026 but withdrew the list within an hour of publication. The withdrawn February list included many of the entities newly designated on June 8.

[2] Department of War, Press Release, “DOW Releases List of Chinese Military Companies in Accordance With Section 1260H of the National Defense Authorization Act for Fiscal Year 2021” (June 8, 2026), available here.

[3] WuXi Biologics is not included on the updated 1260H List. WuXi Biologics and WuXi AppTec operate as separate publicly traded companies that were independently carved out from their historic parent company, WuXi PharmaTech.

[4] As described on the 1260H List, designation criteria include ownership by, control by, or affiliation with government bodies such as the State-Owned Assets Supervision and Administration Commission (SASAC), the Ministry of Industry and Information Technology (MIIT), the State Administration of Science, Technology and Industry for National Defense (SASTIND), or the People’s Liberation Army (PLA). Many entities are also designated as “military-civil fusion contributor[s] to the Chinese defense industrial base” on the basis of their receipt of assistance through government-sponsored programs (including through “Little Giant” or “Single Champion” designations), their affiliation with the bodies listed above, or their location in a “military-civil fusion enterprise zone.”

[5] The full text of the 2024 NDAA is available here.

[6] Section 851 of the National Defense Authorization Act for Fiscal Year 2026 (Pub. L. 119-60), commonly referred to as the BIOSECURE Act.

[7] We discussed the BIOSECURE Act in a prior client alert memo, available here.

[8] We previously discussed the NS-CMIC List in a client alert memo, available here.

[9] Comprehensive Outbound Investment National Security Act of 2025 (Title LXXXV of the National Defense Authorization Act for Fiscal Year 2026 (Pub. L. 119-60)).

[10] We discussed the COINS Act in a prior blog post, available here.

[11] Treasury first announced its intent to establish the Known Investor Program in May 2025. We discussed the CFIUS Known Investor Program in a prior blog post, available here.