Alibaba, Chinese e-commerce and tech giant, has filed a lawsuit against the United States government, seeking removal from a Pentagon blacklist that labels the company as having links to China’s military, a designation the firm says is unfounded and damaging.

Washington doesn’t know how to untangle China’s military-civil fusion.

Chinese technology and e-commerce giant Alibaba Group has sued the U.S. Department of Defense over its designation as a 'Chinese military company,'...