US appeals court orders reconsideration of DJI's Pentagon blacklist status

Key facts

• A U.S. appeals court has ordered a lower court to re-evaluate DJI's inclusion on the Pentagon's list of Chinese military companies.
• The court found that the unclassified record did not adequately support the conclusion that DJI contributes to the Chinese defense industrial base.
• DJI, the world's largest drone maker, has stated it is not owned or controlled by the Chinese military.
• The Pentagon's list bars the Defense Department from contracting with designated companies, with a broader ban on their products taking effect in 2027.
• DJI has reported losing business deals and being stigmatized as a national security threat due to its inclusion on the list.

A U.S. appeals court has directed a lower court to reconsider whether Chinese drone manufacturer DJI should be removed from a Pentagon blacklist. The U.S. Court of Appeals for the District of Columbia Circuit ruled that the initial decision to keep DJI on the list was flawed because it relied solely on unclassified information, which lacked sufficient evidence to conclude the company supports China's defense industrial base.

DJI, the world's largest drone maker, has been actively challenging its inclusion on the list, arguing that it has suffered significant business losses and reputational damage. The company maintains it is not owned or controlled by the Chinese military. The Pentagon's designation prohibits the Defense Department from contracting with listed companies, and a wider ban on purchasing their products through third parties is set to take effect in 2027.

This ruling comes as other Chinese companies, such as biotechnology firm WuXi AppTec and e-commerce giant Alibaba, are also contesting their placement on similar lists. The Pentagon expanded its blacklist to 188 companies in June, citing concerns about China's military leveraging its private sector for advancements amidst ongoing geopolitical tensions with the United States.