China Imposes Mass Sanctions on U.S. Defense, Drone, and Rare Earth Firms: Seen as Retaliatory Measures

Retaliatory Measures Seen After U.S. Defense Department Adds Alibaba and Others to 'Blacklist'

Limited Real-World Impact Expected, According to Analysts

Chinese Ministry of Finance Bans Government Procurement from 46 U.S. Companies

According to China's Ministry of Commerce, ten U.S. defense, drone, and rare earth companies have been added to its export control list. In addition, China's Ministry of Finance announced sanctions prohibiting government procurement of products from 46 American companies. These moves are interpreted as a countermeasure following the recent decision by the U.S. Department of Defense (referred to as the “Department of War” in China) to add Chinese companies such as Alibaba, Baidu, and BYD to what is commonly called a “blacklist.”

From Export Licensing to Tighter Export Control List Sanctions

U.S. President Donald Trump (right) and Chinese President Xi Jinping are holding a summit in Beijing this past May. Photo by Reuters Yonhap News Agency

On June 22, China's Ministry of Commerce announced that, in accordance with the Export Control Law of the People's Republic of China and the Regulations on the Export Control of Dual-Use Items of the People's Republic of China, ten American companies would be added to the export control list. The Ministry stated that these measures have been implemented “to safeguard national security and interests, and to fulfill international obligations such as non-proliferation.” Dual-use items refer to goods that can be used for both civilian and military purposes.

As of this date, Chinese exporters are prohibited from exporting dual-use items to these ten companies. Any ongoing exports must be halted immediately. If, for special reasons, exports are deemed absolutely necessary, a license application must be submitted.

The companies named on the export control list are: Abi Ox, Red Cat Holdings, Teal Drones, IMSAR, Xiaya Robotics, Ball Aerospace and Technologies, Oshkosh Defense, L3 Harris Maritime Services, MP Materials, and USA Rare Earth—a total of ten firms.

On the same day, China’s Ministry of Finance also announced sanctions banning government procurement of products from 46 U.S. companies. This directive was communicated to both central budget institutions and local finance authorities. The targeted companies include Lockheed Martin, Raytheon Missiles & Defense, General Atomics Aeronautical Systems, General Dynamics Land Systems, and the defense, space, and security division of Boeing, among others. According to the Associated Press, the official statement did not specify the reasons for these sanctions.

Retaliatory Measures in Response to U.S. Government Blacklist

Alibaba booth installed at China International Airport in July 2025. Photo by AP Yonhap News Agency

These actions are seen as retaliatory measures following the U.S. government’s recent addition of Chinese big tech companies to what is effectively a blacklist. On June 8, the U.S. Department of Defense announced that 188 companies—including Alibaba, Baidu, BYD, and NIO—would be included in the “Chinese military-backed companies (1260H)” list.

A spokesperson for China's Ministry of Commerce elaborated during a press briefing that the export ban was imposed “in response to the U.S. government’s malicious act of adding so-called ‘Chinese military-backed companies’ to its list.”

Experts have assessed that China’s measures are largely symbolic. George Chen, the China partner at the geopolitical consulting firm The Asia Group (TAG), told a foreign news outlet, “Most of the companies subject to these sanctions are related to the American defense industry or have close ties to the U.S. government. Since these firms do not conduct much business in China to begin with, the actual impact will remain mostly symbolic.” He added, “This measure is a proportional response to the U.S. Department of Defense’s 1260H list.”

This content was produced with the assistance of AI translation services.