Pentagon blacklist raises spectre of investment curbs for Chinese tech firms

Chinese tech giants including Alibaba and Baidu strongly reject the Pentagon’s characterisation of them as “Chinese military companies”

The Pentagon’s expanding blacklist of Chinese companies is increasing reputational risks for some of the country’s biggest technology firms and raising the prospect of future restrictions on access to US investment, according to legal experts.

In a Federal Register notice scheduled for publication on Wednesday, the US Department of Defence designated a broad group of Chinese companies as “Chinese military companies” under Section 1260H of the National Defence Authorisation Act.

The latest additions span sectors ranging from artificial intelligence and electric vehicles to robotics and biotechnology, including Alibaba Group Holding, Baidu, BYD, WuXi AppTec, RoboSense and Unitree Robotics.

Chinese memory-chip makers ChangXin Memory Technologies (CXMT) and Yangtze Memory Technologies Co (YMTC) were also added. The pair had been briefly removed from the list in February, a move that sparked criticism from China hawks in Washington.

The update follows the addition of Tencent Holdings and battery giant CATL in January last year. The Pentagon’s roster has now expanded to 188 Chinese entities, up from 134 in the previous official revision.

The announcement weighed on investor sentiment in Hong Kong on Tuesday, adding to broader market weakness. Shares of the newly designated companies fell across the board, with WuXi AppTec closing down 3.7 per cent, Baidu up 0.52 per cent, RoboSense losing 0.83 per cent, Alibaba falling 1.43 per cent and BYD closing up just 0.40 per cent.