Judge blocks US decision to add WuXi to list of firms tied to Chinese military

By David Shepardson and Alexandra Alper

WASHINGTON, Aug 7 (Reuters) – A U.S. judge on Friday barred the Defense Department from including Chinese biotechnology company WuXi AppTec Co on a list of companies believed to support Beijing’s military, saying the government lacked evidence to justify the decision.

U.S. District Judge James Boasberg issued an order to block enforcement of the designation of WuXi in June after the company filed suit.

“A scarlet letter sends a clear message: keep away,” Boasberg wrote, noting that since then WuXi’s customers and suppliers have canceled contracts, terminated longstanding relationships, and moved their business to competitors.

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

WuXi told the court the company employs roughly 450 people in the United States and serves more than 1,000 U.S. customers. A majority of the company’s board and executive managers are U.S. citizens, and U.S. customers accounted for roughly 70% of its revenue last year, it said.

WuXi’s lawsuit said its designation as a Chinese military company was arbitrary, capricious, unsupported by the facts and “the product of political pressure.”

WuXi’s lawsuit came days after the Pentagon in June expanded its blacklist to 188 companies, reflecting concern that China’s military could tap that country’s private sector for advancements, amid elevated geopolitical tensions between Beijing and Washington.

Under recent U.S. law, the Defense Department cannot contract with companies on the list starting later this month, and cannot buy their products or services via third parties beginning in 2027. Inclusion on the list does not mean formal sanctions.

Other businesses added to the list include e-commerce company Alibaba, internet search company Baidu and automakers BYD and NIO. The list is updated at least annually, and businesses can petition for removal.

Founded in 2000, WuXi said it provides research, development and manufacturing services to more than 4,000 pharmaceutical and life-sciences companies, including more than 1,200 customers in the United States. Its market value is about $43 billion, Reuters data shows. 

(Reporting by David Shepardson and Mike Scarcella; Editing by Nia Williams and David Gaffen)