DoD Expands the Section 1260H “Chinese Military Companies” List: Key Changes, New Designations, and What They Mean for Your Business

On June 10, 2026, the Department of Defense (“DoD”) published an updated list of entities designated as “Chinese military companies” under Section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (the “1260H List” or the “CMC List”). Section 1260H requires the Secretary of Defense to identify and publish this list annually through December 31, 2030, and to make additions or deletions no less frequently than annually. The Deputy Secretary of Defense has determined that the entities listed in the updated notice satisfy the requirements for designation as a “Chinese military company.”

The 2026 update significantly expands previous listings, adding over twenty new parent-level designations, which include globally prominent technology, automotive, energy, life sciences, and consumer-facing companies. Companies that do business with, invest in, or source from Chinese entities on this list should carefully evaluate their exposure. Below, we summarize what it means to be on the 1260H List, the key changes in this year’s update, and the potential implications for your business.

Legislative Background

Section 1260H of the FY2021 NDAA directs the Secretary of Defense to identify entities that are “Chinese military companies” operating directly or indirectly in the United States. An entity qualifies for designation if it (1) is engaged in providing commercial services, manufacturing, producing, or exporting, and operates directly or indirectly in the United States; and (2) either has sufficient connections to the People’s Liberation Army or any other organization subordinate to the Central Military Commission of the Chinese Communist Party, or is identified as a military-civil fusion contributor to the Chinese defense industrial base.

Specifically, under Section 1260H, an entity may be designated as a “military-civil-fusion contributor” if it meets certain statutory criteria, which include, but are not limited to, being affiliated with entities such as 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”).

Continuing Designations

Many of the companies previously listed remain on the 1260H List. Some companies are no longer listed as subsidiaries but remain on the 1260H List in their own right, though the substantive impact of their designation does not change.

New Additions and Notable Changes

Notably, the June 2026 edition of the 1260H List expands the number of designated companies and includes several prominent global companies and their subsidiaries. New additions to the list include companies that span key industries such as artificial intelligence, automotive, consumer electronics, e-commerce, energy (batteries and solar), life sciences, and semiconductors. The DoD’s reasoning for including these companies on the 1260H List includes affiliations with the State-owned Assets Supervision and Administration Commission of the State Council (“SASAC”), MIIT, and the PLA, status as military-civil fusion contributors based on those affiliations, or, in some instances, being indirectly owned by one of these entities.

The DoD also removed 10 companies or subsidiaries that were previously designated, having determined that those entities do not operate in the United States.

Key Takeaways

The expansion of the 1260H List signals DoD’s focus on China’s military-civil fusion strategy and increasing concern within the U.S. government regarding the strategy’s impact on American national and economic security. While many of the companies in prior editions already had a global presence, the additions to the 1260H List this year expand into mainstream consumer and technology sectors in unprecedented ways, signaling a broadening of the 1260H List beyond traditional defense-industrial and state-owned enterprises into consumer technology, e‑commerce, and electric vehicles. Companies with supply chain, investment, or commercial relationships with these entities should evaluate whether additional compliance actions are warranted.

The expansion of the 1260H List is notable as one of the few U.S. Government actions overtly targeting China in the context of ongoing bilateral engagement between the United States and China. While trade talks between the United States and its Chinese counterparts occurred earlier this year, the posting of the 2026 list and its expansion into new companies and industries could represent a shift in posture for the U.S. Government as it prepares to resume discussions with China in Washington, D.C., in September 2026.

Effects of a 1260H Designation and Next Steps for Companies

A designation on the 1260H List does not, by itself, impose sanctions or prohibit commercial transactions with the designated entity. However, a 1260H designation carries potentially significant downstream consequences across multiple regulatory regimes. Companies that transact with parties on the 1260H List should be aware of the following areas of impact.

DoD Government Contracting: Government contractors that do business with the DoD are subject to two separate prohibitions concerning entities on the 1260H List: 

• Effective June 30, 2026, the DoD is prohibited from purchasing goods, services, or technology directly from a 1260H designated entity. DoD also cannot enter into, renew, or extend a contract for goods or services produced or developed by an entity on the 1260H List.[1] This prohibition extends beyond direct contracting and may affect companies throughout the supply chain. DoD contractors should evaluate their supply chains to confirm they do not procure goods or services from a company that has a 1260H designation.

• DoD contractors also need to avoid contracting with “covered lobbyists” who conduct “lobbying activities” (as defined under the Lobbying Disclosure Act, 2 U.S.C. § 1602) on behalf of a company that has a 1260H designation. Effective June 30, 2026, the DoD is prohibited from contracting with any entity, or its parent company of subsidiaries, if such entity is a party to a contract with a covered lobbyist.

Sanctions Designations: Entities on the DoD’s 1260H List also may be at heightened risk of being added to the U.S. Department of the Treasury’s Non-SDN Chinese Military-Industrial Complex Companies List (the “NS-CMIC List”). The NS-CMIC List is maintained by the Office of Foreign Assets Control (“OFAC”) and carries significant consequences: U.S. persons are generally prohibited from purchasing or selling publicly traded securities of entities on the NS‑CMIC List, or any securities that are derivative of or designed to provide investment exposure to such securities. Companies and investors should monitor whether newly designated 1260H entities are subsequently added to the NS-CMIC List, as such additions would trigger these investment restrictions.

Export Controls: Engaging in export transactions with parties on the 1260H List is not independently prohibited by Section 1260H or any related regulations. However, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) has in the past suggested that an entity’s appearance on a predecessor DoD list is a “red flag” requiring additional diligence to determine whether a license may be required under BIS’s military end use controls in Part 744.21 of the EAR (“MEU controls”).[2] The MEU controls identify foreign parties as military end users for which is a license is required to export, reexport, or transfer (in country) commodities (the “MEU List”). However, the MEU List is not exhaustive, and BIS has stated that exporters must conduct their own due diligence to determine if entities fit the definition of a “military end user.” This definition would include entities in China that are military services, national guard and national police, government intelligence or reconnaissance organizations, “or any [Chinese] person or entity whose actions or functions are intended to support ‘military end uses’ as defined 744.21(f).” Accordingly, companies should conduct enhanced due diligence to understand the identity of the parties with whom they are transacting and the end use of their products by such parties.

Conclusion

The June 2026 expansion of the 1260H List represents a significant escalation in the U.S. Government’s approach to China’s military-civil fusion strategy and related national security issues. By designating globally prominent companies across the artificial intelligence, automotive, consumer electronics, e-commerce, energy, life sciences, and semiconductor sectors, the DoD has signaled that the scope of entities considered to be “Chinese military companies” extends well beyond traditional defense-industrial enterprises. The downstream consequences of a 1260H designation—spanning government contracting restrictions, potential investment prohibitions under the NS-CMIC List, and heightened export control due diligence expectations—underscore the need for companies to take a comprehensive, cross-regulatory approach to assessing their exposure. Companies with existing or contemplated commercial relationships, supply chain dependencies, or investments involving designated entities should promptly evaluate their risk profiles, review contractual obligations, and implement enhanced compliance measures to mitigate potential legal and operational risks.

DoD Announcement

OFR Publication Link

[1] NDAA 2024 Sec. 805 Public Law No: 118-31

[2] See BIS, Addition of ‘Military End User’ (MEU) List to the Export Administration Regulations and Addition of Entities to the MEU List, 85 FR 83793, 83794, https://www.federalregister.gov/d/2020-28052/p-13 (“Exclusion from the MEU List is not indicative of whether or not a license is required. For example, parties not listed on the MEU List in this final rule, but included on the lists made public pursuant to Section 1237 of the National Defense Authorization Act of Fiscal Year 1999, 50 U.S.C. 1701 note, would raise a Red Flag under the EAR and would require additional due diligence by the exporter, reexporter, or transferor to determine whether a license is required under § 744.21.”).