This taken on February 5, 2020 shows a security personnel walking in front of the Alibaba headquarters in Hangzhou, some 175 kilometres (110 miles) southwest of Shanghai. (AFP photo)
The administration of outgoing US President Donald Trump is contemplating adding Alibaba Group Holding Ltd. and Tencent Holdings Ltd. to a blacklist of companies allegedly owned or controlled by the Chinese military, sources say.
The plan, which would restrict Americans from buying shares of the tech giants, could inflame the already worsening tensions between Washington and Beijing before President-elect Joe Biden takes office.
The designations are overseen by US Defense Department officials who have not yet finalized the plan and who are also discussing adding other Chinese firms, the sources, who spoke on condition of anonymity, told Reuters.
If added, Alibaba and Tencent would be affected by an executive order Trump signed in November, which will take effect in November, 2021.
On Thursday, shares in Alibaba and Tencent dropped. Alibaba fell more than 5% and Tencent dropped as much as 4.4% in Hong Kong trading.
Meanwhile, some investors expressed doubt that the two companies would come under long-term US ownership restrictions.
"These are private companies that are widely owned, predominantly by US and global investors," said Brendan Ahern, Chief Investment Officer of Krane Funds Advisors.
Steven Leung, executive director at Uob Kay Hian (Hong Kong) Ltd. also said, "If the bans are implemented then itd be a huge thing for the market."
Leung, however, added, "Its still too early to say. After the Biden administration starts, the policy could change again."
The new move is part of a raft of tough measures against Chinese firms Trump has been taking in his waning days in the White House.
On Tuesday, the Republican president barred transactions with eight Chinese apps which he claims undermine Americas national security.
Citing the measures taken by India to ban over 200 Chinese connected software applications, Trump signed an executive order banning transactions with Alipay, CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office.
Also in August, he signed executive orders to block some US transactions with WeChat and the Chinese-owned video app TikTok. US courts, however, blocked the restrictions mainly on freedom of speech grounds.
In December, his administration added Chinas main chipmaker SMIC and national offshore oil and gas producer CNOOC to a blacklist of alleged Chinese military companies.
LINK: https://www.ansarpress.com/english/21797
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