Hesai Photo: VCG

 
Chinese LiDAR manufacturer Hesai prevailed on Tuesday (local time) in its challenge to the US Department of Defense's (DOD) Section 1260H "Chinese military company" designation, according to a statement sent to the Global Times. The ruling marks a significant legal victory for Hesai in its challenge to the Section 1260H designation.

The ruling makes Hesai another Chinese company in recent weeks, after dronemaker DJI, to achieve a significant procedural victory in the legal challenge over the so-called "Chinese military company" designation.

According to Hesai's statement, the US Court of Appeals for the District of Columbia Circuit reversed the prior district court judgment in favor of the DOD and remanded the case, ordering the DOD to cure the relevant procedures and reconsider Hesai's designation.

In January 2024, the DOD first added Hesai to its Section 1260H list of "Chinese military companies." Hesai subsequently filed a lawsuit challenging the designation. During the litigation, the US Justice Department said that the Pentagon had delisted Hesai on the basis of the original grounds, but now planned to relist the company "based on the latest information available."

In a decision issued on August 18, 2026, a three-judge panel of the D.C. Circuit reversed the district court's prior judgment against Hesai and unanimously held that the DOD had violated Hesai's Fifth Amendment right to due process. 

The Court found that the DOD's designation of Hesai - issued without any advance notice, disclosure of evidence, or opportunity to respond - had failed to satisfy these minimum constitutional requirements, according to the statement.

The Court found that a Section 1260H designation not only inflicts the reputational harm associated with being labeled a "Chinese military company," but also automatically deprives the designated company of certain US government contracts and certain forms of federal financial support, and that the designation therefore implicates constitutionally protected substantive interests, according to the statement.

While the Court did not immediately order Hesai's removal from the Section 1260H list - citing deference to "national security and foreign policy realities" - it directed the district court to remand the matter to the DOD, which must now provide Hesai with the unclassified evidence against the company and allow it a full opportunity to respond before issuing any new final determination, the statement said.

Hesai stressed that there was no legitimate basis for its inclusion on the list. Going forward, the company said that it will follow the procedures required by the court, fully present the facts and its position, and safeguard its legitimate rights and interests. 

On Monday, the Global Times learned from Chinese dronemaker DJI that a major substantive development had occurred in DJI's lawsuit against the US DOD, as a US federal appeals court ordered a lower court to reconsider the legality of the Pentagon's decision to place DJI on a blacklist of companies allegedly linked to China's military. 

This ruling marked an important procedural victory in DJI's years-long legal battle in the US, according to DJI. 

On June 8, the US DOD updated its list of so-called "Chinese military companies" under Section 1260H of the National Defense Authorization Act, adding companies including Alibaba and BYD and further expanding its blacklist of Chinese technology firms, with a focus on key players in sectors at the center of China-US technological competition.

Reuters reported on June 23 that the latest list included 188 Chinese entities.

So far, several Chinese companies, including Alibaba and WuXi AppTec, have also turned to legal action to challenge what they described as discriminatory accusations.

Chinese authorities have already made their position clear on the US move to add a number of Chinese technology companies to its list of firms allegedly linked to the Chinese military.

"China firmly opposes the US overstretching the concept of national security and formulating various types of discriminatory lists to go after Chinese businesses. We urge the US to correct its wrongdoings, and stop the unwarranted suppression of Chinese businesses. China will do what is necessary to firmly protect their legitimate and lawful rights and interests," Foreign Ministry spokesperson Lin Jian told a press conference on July 9.