Department of Defense Releases Update to Section 1260H List of Chinese Military Companies Operating in the United States

Get the latest on the Department of Defense’s updated Section 1260H List, with new contracting restrictions and implications for U.S. businesses. Learn about the additions, impact, and congressional oversight.

Department of Defense (DoD) updated its Section 1260H List to list Chinese military companies operating in the US. (Photo: Global Times)

New Prohibitions Impacting DoD updated Section 1260H List of Chinese Military Companies

The Department of Defense (DoD) updated its Section 1260H List to list Chinese military companies operating in the US. DoD contracts with these businesses are affected by this modification. The amended list, imposed by the National Defense Authorization Act for Fiscal Year 2021, sets new contractual limits for U.S. defense contractors on June 30, 2026.

The updated Section 1260H List, which includes 17 new entities and removes three from the prior version, underscores the DoD’s ongoing efforts to counter the People’s Republic of China’s Military-Civil Fusion Strategy. Notably, many of the newly listed entities also appear on other U.S. restricted party lists, raising challenges for businesses navigating compliance across multiple lists.

Effective June 30, 2026, DoD will be prohibited from executing new contracts with entities on the Section 1260H List or entities under their control, with further restrictions on purchasing end products or services taking effect on June 30, 2027. Unlike previous statutes, the new law allows for exceptions for indirect purchases and applies specifically to DoD, presenting unique compliance challenges for defense contractors.

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While the direct legal impact of Section 1260H List designation is presently limited, its inclusion on reputable restricted party screening platforms necessitates careful consideration by U.S. companies. Furthermore, the heightened scrutiny by Congress, as evidenced by requests for a briefing and considerations for more severe restrictions, underscores the evolving regulatory landscape and potential legislative developments.

The implications of the updated Section 1260H List extend beyond the legal sphere, with reputational and compliance risks for businesses operating in the defense space. As regulations and oversight continue to evolve, companies must stay abreast of developments and proactively adapt their compliance strategies to navigate the complex landscape of U.S.-China relations and national security concerns.

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