Washington's top lobbying firms are moving quickly to cut ties with Chinese tech giants as new US restrictions tighten the pressure around the Pentagon's China blacklist. Alibaba Group NYSE:BABA has lost five lobbying firms, while Tencent Holdings (TCEHY) has lost four, according to recent disclosures from firms including Brownstein Hyatt Farber Schreck, Mercury Public Affairs, and MO Strategies. The new rule, taking effect Tuesday, could force lobbyists to choose between Chinese companies on the Pentagon's 1260H list and US defense contractors.
The restriction bars the Defense Department from working with any company represented by lobbyists who also work for entities blacklisted by the Pentagon for allegedly aiding China's military. The 1260H list has grown to 188 companies, up from 20 under an earlier statute, and now spans key technology sectors including semiconductors, artificial intelligence, robotics, and drones. Alibaba and Tencent have previously denied working with China's military, while Alibaba sued the Pentagon last week to seek removal from the list.
For investors, this could mark a deeper compliance and political risk moment for Chinese technology companies with US exposure. Alibaba is facing added pressure after Anthropic accused the company of using thousands of fraudulent accounts to access Claude AI output in an effort to develop a rival chatbot at a lower cost, an allegation Alibaba has not commented on. With new Pentagon contracting limits also taking effect Tuesday and further restrictions scheduled a year from now, the blacklist could become a more important pressure point in the US-China technology rivalry.