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

On Friday, a US federal judge temporarily halted the Pentagon from labeling Chinese biotech firm WuXi AppTec as a "Chinese military company," as the judge found that defense officials had misinterpreted the evidence supporting the decision. District Chief Judge James Boasberg issued a 35-page opinion, warning that the designation sends a clear message for businesses to steer clear.

Boasberg cited instances where customers and suppliers canceled contracts, severed relationships, or relocated work to WuXi's competitors following the designation. The Pentagon did not immediately comment on the ruling, citing a policy against discussing ongoing litigation. WuXi AppTec declined to comment as well. The ruling marks a legal triumph for one of China's largest pharmaceutical research and manufacturing service providers and a setback for the US's expanding use of national security restrictions against major Chinese commercial companies.

However, the decision does not permanently remove WuXi from the Pentagon's Section 1260H list or prevent the department from re-designating the company using evidence and reasoning that comply with the law. The order also does not affect other Chinese companies on the Pentagon list, such as Alibaba, Baidu, BYD, or others. Analysts suggest that Boasberg's rejection of unsupported or inaccurately characterized evidence could bolster similar legal challenges to designations based on indirect state or military affiliations.

WuXi AppTec, based in Shanghai, operates six facilities and employs around 450 people in the US, serving more than 1,000 US customers. These customers represent about 70% of the company's $6.7 billion in global revenue last year. Since the designation, customers have interrupted work, canceled projects or transferred programs to other suppliers, according to court documents.