According to two sources familiar with the matter at hand, the U.S. Administration is weighing options to add Tencent and Alibaba to a trade blacklist on the grounds that it is either owned or controlled by the Chinese military.
Officials from the Department of Defense who oversee the designations have yet to finalize plans to add the companies to the Entity List; they are also likely to add other Chinese companies, said sources while speaking on the condition of anonymity.
Neither Alibaba nor Tencent immediately responded to requests for comment.
With the news reaching the market, Alibaba’s shares were down by 5% in morning trade on the Hong Kong Stock Exchange. Tencent’s shares were down by 3%. Alibaba’s U.S.-listed shares closed down by 5%.
The Trump Administration has adopted logical and reciprocal measures against Chinese companies which do not comply to U.S. audit standards. Washington has also sought the source of the coronavirus, with Beijing blocking the World Health Organization from accessing sites in Wuhan, from where the virus originated. World leaders have also condemned China’s unlawful arrest of elected lawmakers in Hong Kong.
So far the Pentagon has blacklisted 35 Chinese companies, including Chinese chipmaker SMIC and oil giant CNOOC.