The Pentagon added some of the biggest Chinese firms, including Alibaba, BYD, and Baidu, to a list of companies accused of supporting China’s military, a move that triggered a sell-off across the shares of the affected listed companies.
However, the list was later quietly withdrawn by US authorities without any official explanation, raising several questions over the decision-making process. The withdrawal has helped shares of the affected companies to recover some of their earlier losses.
The link to the US government’s Federal Register, where the Pentagon’s 1260H list had been posted, was replaced with a “withdrawn,” notice about an hour after being published, Reuters reported.
How much did the companies lose in the stock market?
Following reports that the companies appeared in the 1260H list, Alibaba’s stock listed on the American stock market fell as much as 5% in extended trading on Friday. Meanwhile, Baidu’s share price was down by 4.5%. However, the stocks recovered a bit after their names were withdrawn.
The updated list also removed two of China’s production giants of memory chips, ChangXin Memory Technologies Inc. and Yangtze Memory Technologies Co., in another move that confused analysts and market commentators, according to Bloomberg News.
Being put on the list does not automatically mean that the company will be subjected to legal repercussions. The Pentagon is using the list more and more to limit which firms can do business with the US military or get government research money, the agency said.
Companies respond to US move
Responding to the development, Alibaba told Bloomberg that it is “not a Chinese military company nor part of any military-civil fusion strategy. We will take all available legal action against attempts to misrepresent our company.”
Meanwhile, a Baidu spokesperson said in a statement that “we categorically reject the inclusion of Baidu on the list,” which has “no credible basis” and that the “suggestion that Baidu is a military company is entirely baseless and no evidence has been produced that would prove otherwise.
Baidu also reiterated that it is a publicly listed company, and the company’s products and services are solely designed for civilian use. “We will not hesitate to use all options available to us to have the company removed from the list,” it said.
Alibaba and Baidu are among China’s biggest companies in the artificial intelligence sector, and their addition to the list is almost certain to provoke Beijing, the Bloomberg report said.
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