U.S. Department Of War Expands Section 1260H List To 188 “Chinese Military Companies”

On June 8, 2026, the U.S. Department of War / Department of Defense (“DoW”) released a significant update to the list of “Chinese military companies” operating directly or indirectly in the United States (the “Section 1260H List”), expanding the list to 188 entities. Compared to the last version of the Section 1260H List released in January 2025, the List has been expanded by 65 entities, while 10 entities were removed, for an overall expansion of roughly 40%. As of June 9, 2026, one of the named entities has filed a complaint in the U.S. District Court for the District of Columbia seeking removal from the List.

This latest update marks one of the most substantial revisions since the List’s creation, bringing in a wide range of prominent Chinese technology, semiconductor, electric vehicle, artificial intelligence, and biotechnology companies. The expansion also reflects the DoW’s continued focus on identifying companies it assesses as contributors to China’s military-civil fusion strategy. Designation on the Section 1260H List is not comparable to designation on the Specially Designated Nationals List (the “SDN List”) maintained by the Office of Foreign Assets Control (“OFAC”), since U.S. persons generally are not prohibited from dealing with Section 1260H-designated companies.

However, designation on the Section 1260H List has greater potential consequences than in past years due to recent legislative changes.

• Pursuant to Section 851 of the FY2026 NDAA (the “BIOSECURE Act”), every entity designated on the Section 1260H List is automatically deemed to be a “biotechnology company of concern” (“BCC”). U.S. federal agencies and recipients of federal funds are prohibited from procuring or obtaining biotechnology equipment and services provided by designated BCCs.
• Pursuant to Section 851 of theFY2025 NDAA, the DoW is prohibited from entering into contracts with any company (including its parent or subsidiary) that engages lobbyists or lobbying firms representing companies designated on the Section 1260H List.

Statutory Basis and Evolution

The Section 1260H List originates from Section 1260H of the “William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021”(“FY2021 NDAA”). Section 1260H requires the Secretary of Defense to identify and publicly list entities that “operat[e] directly or indirectly in the United States” and being a “Chinese military company”. A Chinese military company is an entity that is owned, controlled, or affiliated with the PLA or other organizations subordinate to China’s Central Military Commission, or are deemed “military-civil fusion contributors” to China’s defense industrial base. Section 1260H further mandates annual reporting and ongoing updates, including additions and deletions.

Since its initial release with 47 entities, the Section 1260H List has expanded steadily across administrations. Under the Biden Administration, the DoW released an updated List on (i) October 5, 2022 (the “2022 Update”), in which 13 additional entities were added, continuing the focus on industrial and defense-linked companies; (ii) on January 31, 2024 (the “2024 Update”), in which the DoW designated entities operating in certain emerging technology sectors and removed certain entities that it determined did not meet the requirements for designation; and (iii) on January 7, 2025 (the “2025 Update”), in which the Section 1260H List was expanded to 134 entities, with broader coverage of entities operating across AI, semiconductors, biotechnology, and telecommunications sectors.

Key Features of the 2026 Update

Notably, the 2026 update reflects a clear policy shift toward capturing dual-use technologies and companies with indirect or ecosystem-level connections to China’s defense industrial base.

Firstly, the inclusion focus has shifted toward prominent commercial companies. Unlike earlier concentration on state-owned defense contractors, the 2026 list reflects a broader scope by incorporating major private-sector and publicly traded companies. These include companies operating in artificial intelligence and surveillance technology, as well as leading digital platforms. The list also captures key players in electric vehicles and battery production, alongside companies engaged in semiconductors and advanced electronics.

Moreover, the update expands coverage into emerging technology sectors. In addition to traditional industries, it now encompasses rapidly developing fields like robotics and autonomous systems, biotechnology and genomics, and renewable energy. This expansion reflects a growing recognition of the strategic importance of these sectors in both commercial and defense-related technological advancement.

Additionally, there is a continued and explicit focus on military-civil fusion linkages. Consistent with statutory criteria, the DoW emphasizes connections between listed companies and key state entities and institutions. These include affiliations with the State-owned Assets Supervision and Administration Commission (“SASAC”) and the Ministry of Industry and Information Technology (“MIIT”). This focus underscores the importance of identifying relationships that may facilitate the integration of civilian technological capabilities into military applications.

Practical Implications

The Section 1260H List is not a sanctions list. It does not impose blocking sanctions or prohibit U.S. persons from engaging in transactions with listed entities. However, the practical significance of designation on the Section 1260H List has been steadily increasing in the past few years.

• Defense contracting restrictions. Under Section 805 of the FY2024 NDAA, the DoW will be prohibited, effective June 30, 2026, from entering into, renewing, or extending contracts, directly with entities designated on the Section 1260H List or entities controlled by the Section 1260H-designated companies, for the procurement of goods, services, or technology. Further, beginning June 30, 2027, the DoW will be barred from procuring goods or services that indirectly involve such entities. These restrictions significantly limit the ability of designated “Chinese military companies” to participate in the U.S. defense supply chain.
• Lobbying restrictions. Under Section 851 of the FY2025 NDAA, the DoW is prohibited from entering into contracts with any company (including its parent or subsidiary) that engages lobbyists or lobbying firms representing the Section 1260H-designated companies. This restriction extends the consequences of designation beyond the listed entities themselves, creating potential exposure for U.S. companies and lobbying firms that maintain relationships with Section 1260H-designated companies.
• BIOSECURE Act. Under Section 851 of the FY2026 NDAA, U.S. federal agencies and the recipients of federal loans and grants are prohibited from (i) procuring biotechnology equipment or services produced or provided by a BCC; or (ii) entering into, extending, or renewing contracts with entities that use such equipment or services provided by a BCC in the course of contract performance. Because every entity designated on the Section 1260H List is automatically deemed to be a BCC, this prohibition has broad implications for designated entities operating in the biotechnology, genomics, and life sciences sectors, as well as for their U.S. counterparties that receive federal funding.
• Potential capital-market consequences. Under Section 8531(a)(1)(B) of the FY2026 NDAA, a presidential report is required to address whether the Section 1260H-designated companies would also qualify for inclusion on the “Non-SDN Chinese Military-Industrial Complex Companies List” (the “NS-CMIC List”) maintained by the OFAC. Although the Section 1260H List is distinct from the NS-CMIC List, which is governed by Executive Order 13959, as amended, there is already substantial overlap between the two lists. The NS-CMIC List imposes only “investment-related” restrictions: specifically, it prohibits U.S. persons from purchasing or selling publicly traded securities (including derivatives thereof and securities designed to provide investment exposure to such securities) of the designated entities. For publicly traded companies, including those whose securities are traded in the U.S., this could extend the consequences beyond federal procurement and into securities markets.

Apart from the risks arising from recent legislative changes, there are two primary risks for any entity designated on the Section 1260H List:

• Commercial contract and loan exposure. Designation on the Section 1260H List could constitute a default or breach of a representation or warranty under a commercial contract or loan agreement in which the Section 1260H-designated entity represents that it is not a target of sanctions or similar restrictive measures. Counterparties and lenders may seek to exercise remedies, including termination rights or acceleration of indebtedness, on the basis of such a designation, even though the Section 1260H List is not a sanctions list per se.
• Risk of future designations. There is a residual risk that designation on the Section 1260H List increases the likelihood of an entity’s subsequent designation on other U.S. national security-related lists, including export control lists such as the Entity List and the Military End-User (the “MEU”) List maintained by the Bureau of Industry and Security, and OFAC’s SDN List. While designation on the Section 1260H List does not automatically trigger inclusion on any other list, it may reflect an assessment by the U.S. government that the entity has connections to China’s defense industrial base, which could inform future regulatory actions.

Conclusion

The June 2026 update to the Section 1260H List underscores the U.S. government’s intensified scrutiny of the intersection between commercial innovation and national security risks associated with China’s military-civil fusion strategy. Although the list does not directly prohibit commercial dealings, its growing integration into procurement restrictions and compliance frameworks signals that it will play an increasingly prominent role in shaping risk assessments, supply chain due diligence, and regulatory exposure for multinational businesses.

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