appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Teresa Elena Frontado

A US federal judge on Friday temporarily blocked the Pentagon from designating Chinese biotechnology group WuXi AppTec as a “Chinese military company”, finding that defence officials repeatedly misread the evidence used to justify the decision.
US District Chief Judge James Boasberg granted WuXi a preliminary injunction barring the Department of Defence from enforcing or otherwise giving effect to the designation while the company’s lawsuit proceeds.
“A scarlet letter sends a clear message: keep away,” Boasberg wrote in a 35-page opinion, pointing to customers and suppliers that had cancelled contracts, ended long-standing relationships or moved business to WuXi’s competitors following the designation.
A Pentagon spokesperson declined to address the ruling or whether the department planned to appeal.
“As a matter of policy, the Department does not comment on ongoing litigation,” the spokesperson said in response to questions from the South China Morning Post.
“We welcome the court’s decision to grant the preliminary injunction we petitioned for,” a WuXi AppTec spokesperson told the Post. “This ruling relieves us from the immediate adverse consequences of the erroneous 1260H designation during the litigation process.”
The spokesperson said WuXi believed the facts presented in its court filings would prevail following “an objective and fair judicial review”, adding that its operations remained “fully functional”.
The ruling represents an early legal victory for one of China’s largest pharmaceutical research and manufacturing service providers and a setback for Washington’s expanding use of national-security restrictions against major Chinese commercial companies.


But the decision does not permanently remove WuXi from the Pentagon’s Section 1260H list or prevent the department from designating the company again using evidence and reasoning that satisfy the law.
The order does not affect Alibaba, Baidu, BYD or other Chinese companies placed on the Pentagon list.
However, analysts say Boasberg’s rejection of unsupported or inaccurately characterised evidence could strengthen similar legal challenges to designations based on indirect state or military affiliations.
Alibaba, which owns the South China Morning Post, has separately sued the Pentagon over its addition to the list.
Judge questioned Pentagon's reasoning
WuXi was added to the list in June after the Pentagon alleged that it was indirectly owned by China’s State-owned Assets Supervision and Administration Commission, or Sasac, and indirectly affiliated with the State Administration of Science, Technology and Industry for National Defence and the People’s Liberation Army (SASTIND).
Boasberg found that each of those three rationales was likely deficient under the Administrative Procedure Act, which allows courts to set aside government actions found to be arbitrary or capricious.
The Pentagon’s ownership finding rested largely on an investment in WuXi by a fund connected to the Aviation Industry Corporation of China, a state-owned aerospace and defence conglomerate overseen by Sasac.
According to the judge, defence officials confused the percentage of the fund’s assets invested in WuXi with the percentage of WuXi owned by the fund.
A source cited by the Pentagon said WuXi shares represented 5.32 per cent of the fund’s net asset value. The department interpreted that figure to mean the fund owned 5.32 per cent of WuXi.
“This is flat-out wrong,” Boasberg wrote.
“If a household puts 5 per cent of its modest savings into a blue-chip stock, that does not mean it owns 5 per cent of the company.”

WuXi told the court that the fund’s actual investment was worth around US$200,000 and represented about 0.001 per cent of the company’s equity. Boasberg said he did not need to accept those figures to conclude that the Pentagon had mischaracterised its own sources.
“These errors do not inspire confidence in the fastidiousness of the agency’s decision-making process,” he wrote.
The court found similar problems with the Pentagon’s claims that WuXi was affiliated with China’s defence-industry regulator and the PLA.
Those conclusions were based on records of pharmaceutical studies involving hospitals affiliated with five universities supervised by the defence regulator, as well as one study involving the PLA General Hospital.
But the underlying records identified WuXi or its subsidiaries only as third-party laboratories hired to process samples. Other pharmaceutical companies had applied for government approval and selected the hospitals where the studies would take place.
The Pentagon nevertheless characterised WuXi as having received approval to conduct the studies in partnership with the universities and the PLA hospital.
The judge said the records did not establish such partnerships or explain why WuXi’s more limited laboratory role amounted to the “close formal or informal association” required by the statute.
Highlighting what he described as the breadth of the government’s reasoning, Boasberg noted that the same collection of records listed the University of Michigan as an applicant for a study conducted at a hospital affiliated with Peking University.
“If WuXi’s more remote role suffices to establish a close association with SASTIND, the report’s logic would make a member of the Big Ten a Chinese military company,” he wrote, referring to the US collegiate athletic conference where Michigan plays.
Boasberg stressed that courts owed considerable deference to government decisions involving national security and foreign affairs. But he said that deference could not compensate for evidence that did not support the Pentagon’s stated conclusions.
“The public interest in a list with teeth is thus inseparable from the public interest in a list that is accurate,” he wrote.




US operations in limbo
The judge also found that WuXi was suffering irreparable commercial harm from the designation.
The Shanghai-headquartered company operates six facilities and employs about 450 people in the United States. It serves more than 1,000 US customers, which accounted for roughly 70 per cent of its US$6.7 billion in global revenue last year, according to the opinion.
Since the designation, customers have suspended work, cancelled projects or begun transferring programmes to other suppliers, according to court documents. One online marketplace also made WuXi’s services unavailable for purchase without a customer-specific exception.
Because pharmaceutical development programmes can last for years and switching manufacturers may require new regulatory submissions and validation work, Boasberg found that customers moving to competitors were unlikely to return even if WuXi ultimately prevailed.
The designation also carried potential consequences under the Biosecure Act, which requires the White House budget office to publish an initial list of “biotechnology companies of concern” by December.
Being placed on the Section 1260H list is necessary, although not sufficient by itself, for inclusion on the Biosecure Act list. Companies ultimately covered by that law could be excluded from federally funded contracts and supply chains.
The Pentagon had asked Boasberg to stay any injunction during an appeal, but the judge rejected that request, saying the government had not identified any immediate and irreparable harm resulting from the temporary suspension of WuXi’s designation.


Xi to get presidential airport welcome from Trump during US visit starting Wednesday

Chinese province urges firms to seize the day as Xi-Trump meeting provides trade stability

Former WTO head Pascal Lamy on the EU’s China choice: get a rebalance, or go protectionist

US announces AI dialogue with China, launches Board of Trade

US-China relations

US judge blocks Pentagon’s ‘Chinese military’ label for WuXi AppTec

WuXi AppTec is one of China’s largest pharmaceutical research and manufacturing services companies. Photo: Handout

The Pentagon seal is seen in the briefing room at the Pentagon in Washington in March. Photo: AFP/Getty Images/TNS

US unveils critical minerals deals in latest push to counter China

US President Donald Trump speaks at a mining industry round table in Washington on Friday. Photo: AFP

US Trade Representative Jamieson Greer testifies before the Senate Finance Committee in Washington on July 22. Photo: AFP

Beijing decries ‘bullying’ US tech curbs that ensnare Chinese firms and products

A humanoid robot serves as a guide for visitors at the Space Museum of the Harbin Institute of Technology in northeast China’s Heilongjiang province. Photo: Xinhua

Chinese netizens mock US blacklisting of food brands over forced-labour claims

An internet user views the Synear Food webpage on his computer in the background with the company logo displayed on his phone. The company has been blacklisted by Washington for allegedly using forced labour. Photo: Getty Images

A package of ChaCha Food’s roasted sunflower seeds. The company has also been blacklisted by Washington for the alleged use of forced labour. Photo: Weibo

Trump election claims debunked, US critical minerals fears: 7 US-China relations reads

US President Donald Trump listens in the Oval Office of the White House on July 29. Photo: AP

Photo: AP

Photo: Shutterstock

Photo: Pool via AP

Photo: Getty Images via AFP

Photo: AFP

News

China

Diplomacy

Economy, Trade & Business

Politics

Court finds defence officials misread evidence involving a state-linked fund, Chinese universities and a PLA hospital


Court finds defence officials misread evidence involving a state-linked fund, Chinese universities and a PLA hospital.


US judge blocks Pentagon’s ‘Chinese military’ label for WuXi AppTec

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Court finds defence officials misread evidence involving a state-linked fund, Chinese universities and a PLA hospital

Court finds defence officials misread evidence involving a state-linked fund, Chinese universities and a PLA hospital