Post by : Badri Ariffin

A US federal judge has blocked the US Defense Department from enforcing its designation of Chinese biotechnology company WuXi AppTec Co as a company believed to support China’s military.

US District Judge James Boasberg issued the order on Friday, saying the government had not provided sufficient evidence to support the decision. The ruling followed a lawsuit filed by WuXi challenging its inclusion on the Pentagon’s list.

Boasberg had already issued an order in June preventing enforcement of the designation while the legal challenge proceeded.

Court Says Listing Caused Business Damage

In his ruling, Boasberg said the designation had already affected WuXi’s business relationships. He noted that the company’s customers and suppliers had canceled contracts, ended long-standing business relationships and shifted their business to competitors.

The judge described the designation as a serious reputational mark, writing that a “scarlet letter” sends a clear message to others to stay away.

The Pentagon and WuXi AppTec did not immediately respond to requests for comment.

WuXi Says It Has Strong US Business Presence

WuXi told the court that it employs about 450 people in the United States and provides services to more than 1,000 US customers.

The company also said that most of its board members and executive managers are US citizens. According to WuXi, US customers generated about 70% of its revenue last year.

In its lawsuit, WuXi argued that its designation as a Chinese military company was arbitrary and unsupported by the available facts. The company also described the decision as the result of political pressure.

Pentagon Expanded Chinese Companies List to 188

WuXi filed its lawsuit days after the Pentagon expanded its list in June to include 188 companies. The US government has raised concerns that China's military could use the country's private-sector companies to gain access to technological and other advancements.

The expansion came amid heightened geopolitical tensions between Washington and Beijing.

Other companies added to the list included e-commerce giant Alibaba, internet search company Baidu, and automakers BYD and NIO.

What Does the Pentagon List Mean?

Under recent US legislation, the Defense Department will be prohibited from entering into contracts with companies on the list starting later this month.

The restrictions will also prevent the department from purchasing products or services from listed companies through third parties beginning in 2027.

However, being included on the list does not amount to formal US sanctions.

The list is updated at least once a year, and companies have the option to petition the government for removal.

WuXi AppTec Serves Thousands of Life-Sciences Companies

Founded in 2000, WuXi AppTec provides research, development and manufacturing services to more than 4,000 pharmaceutical and life-sciences companies.

The company said it has more than 1,200 customers in the United States. Reuters data puts WuXi AppTec's market value at about $43 billion.

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