On June 8, 2026, the US Department of Defense (“DoD”) published an update to its list of “Chinese military companies” (“CMCs”) operating directly or indirectly in the United States (the “1260H List”), pursuant to Section 1260H of the National Defense Authorization Act for Fiscal Year 2021 (the “NDAA 2021”). The updated list is available here.
The DoD press release states that this update is part of the US government’s continuing effort to highlight and counter the People’s Republic of China’s (“PRC”) Military-Civil Fusion strategy, which “supports the modernization goals of the People’s Liberation Army (“PLA”) by ensuring it can acquire advanced technologies and expertise developed by PRC companies, universities, and research programs that appear to be civilian entities.”
Background on the 1260H List
Section 1260H of the NDAA 2021 requires the Secretary of Defense to identify any entity that is “operating directly or indirectly in the United States or any of its territories and possessions, that is a Chinese military company” and to submit an annual report to Congress with a list of such entities (until December 31, 2030).
The term “Chinese military company” is defined in Section 1260H of the NDAA 2021 as entities that are “beneficially owned by or … acting as an agent of or on behalf of” the PLA, “any other organization subordinate to the Central Military Commission of the Chinese Communist Party”, or “military-civil fusion contributors” to the Chinese defense industrial base. “Military-civil fusion contributors” is also defined in the law as entities that have any of several enumerated government linkages such as “receiving assistance, operational direction or policy guidance” from the Chinese government or the Chinese Communist party. Our prior blog post on the NDAA 2021 and the 1260H List is available here.
Impact of Designation on the 1260H List
There are several direct and indirect implications for entities designated on the 1260H List, including the following:
- DoD Procurement Restrictions: Effective June 30, 2026, DoD is prohibited from procuring goods, services, or technology from entities on the 1260H List. In addition, effective June 30, 2027, DoD is prohibited from contracting for goods and services produced or developed by an entity on the 1260H List or any entity subject to the control of an entity on the 1260H List. Our prior blog post on these developments, as outlined in the NDAA for Fiscal Year 2024, is available here.
- BIS Designation Risks: Entities on the 1260H List may be at increased risk for designation by the Commerce Department’s Bureau of Industry and Security (“BIS”) as a “military end-user” (“MEU”) under the Export Administration Regulations (“EAR”). MEU designation restricts access to certain items “subject to the EAR” (e.g., sensitive technologies, such as semiconductors) and imposes increased due diligence obligations on companies seeking to engage in transactions “subject to the EAR” with MEUs.
- OFAC Designation Risks: Entities on the 1260H List may be at increased risk for designation by the Treasury Department’s Office of Foreign Assets Control (“OFAC”) on the Non-SDN Chinese Military-Industrial Complex Companies List (“NS-CMIC List”). The NS-CMIC List does not impose full blocking sanctions on listed parties. Rather, US persons are prohibited from purchasing or selling any publicly traded securities, or any publicly traded securities that are derivative of such securities or are designed to provide investment exposure to such securities, of any party on the NS-CMIC List.
- BioSecure Act Designation Risks: Entities on the 1260H List may also be at increased risk for designation as biotechnology companies of concern for purposes of the prohibitions of the BioSecure Act if the entity or any subsidiaries, parents, or successors of the entity is determined by the Office of Management and Budget to be “to any extent involved in the manufacturing, distribution, provision, or procurement of any biotechnology equipment or service.”
