China has targeted dozens of US companies in retaliation for the Pentagon’s blacklist

China imposed new trade restrictions on several US companies on Monday, retaliating against Washington’s move to add more Chinese companies to the Pentagon’s list of businesses it accuses of aiding Beijing’s military.

On Monday, China’s Ministry of Commerce placed 10 American industrial suppliers on its export control list, including rare earth miners. Company MP Materials Corp again USA Rare Earthand drone makers Teal Drones and Jaia Robotics – banning the export of any dual-use equipment from China to the companies.

Other companies listed are California-headquartered electronics maker Aveox Inc, Ball Aerospace & Technologies Corp, and military equipment supplier Oshkosh Defense.

In a separate statement on Monday, China’s Ministry of Finance excluded 46 American companies, mostly defense contractors, from participating in government procurement programs. Any foreign-funded, locally registered businesses associated with unlisted firms are exempt.

This comes after the Pentagon earlier this month updated its so-called 1260H list by adding dozens of Chinese technology companies to the list of organizations it believes have aided Beijing’s military. Alibaba Group, Baidu and a car manufacturer BYD were among the latest additions.

The anti-Beijing moves appear to be more symbolic, rather than a major escalation in US-China relations, said Han Shen Lin, China country director at communications firm Asia Group, as many of the targeted companies “have little or no meaningful business exposure to China.”

The 1260H designation does not impose immediate sanctions but prevents the US Department of Defense from awarding direct contracts to the companies involved as of June 30, with restrictions on indirect purchases following 2027. The designation may prevent other government agencies and commercial partners from doing business with listed companies.

Chinese authorities responded earlier this month, saying they would take all necessary measures to protect the “legitimate rights and interests” of Chinese companies, while criticizing the US for “drawing up a discriminatory list under the pretext of national security.”

The latest moves provide “an example” of how China will deal with a slight escalation from the US while keeping broader relations stable, said Dan Wang, China director at Eurasia Group, adding that last month’s Trump-Xi summit is putting relations back on a more positive footing.

While the Pentagon’s move was largely symbolic, it showed how widely Washington has drawn the line around sensitive Chinese technology, from artificial intelligence to consumer electronics and biotech, analysts said.

Several designated Chinese firms have contested the designation while promising legal action to seek its removal. Chinese smartphone maker Xiaomi has won a court challenge to have its name removed in May 2021.