January 27, 2021
Markets PAID

Americans Won't Be Banned From Investing in Alibaba, Tencent, Baidu

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New York-listed Alibaba was among a dozen companies being examined for inclusion in a Pentagon list of firms deemed to support China’s military.

New York-listed Alibaba was among a dozen companies being examined for inclusion in a Pentagon list of firms deemed to support China’s military.

Photo: jewel samad/Agence France-Presse/Getty Images

The U.S. government is expected to let Americans continue to invest in Chinese technology giants
Alibaba Group Holding Ltd.
,
Tencent Holdings Ltd.
and
Baidu Inc.,
after weighing the firms’ alleged ties to China’s military against the potential economic impact of banning them.

New York-listed Alibaba and Baidu, and Hong Kong-listed Tencent, were among a dozen companies being examined for inclusion in a Defense Department list of firms deemed to support China’s military, intelligence and security services, according to people familiar with the matter. U.S. investors have until November to divest their holdings of any firm on the list.

The U.S. no longer plans to add the three firms to the list. Nine other Chinese companies will be added, as well as more than 100 subsidiaries of companies already on the list, the people said.

The decision caps off a weekslong battle that pit Treasury officials, who feared widespread selloffs and economic fallout, against State Department and Pentagon officials seeking a tougher line against Beijing. Up until Wednesday morning, many in the State Department and Pentagon believed that they had a compelling case for the companies to be included once administrative kinks were ironed out, said the people familiar with the matter.

In the end, Treasury Secretary

Steven Mnuchin
prevailed.

The additions to the list will be submitted to Congress and released publicly as soon as Wednesday, said two of the people familiar.

Representatives for the State, Defense and Treasury departments, as well as representatives for Alibaba, Tencent and Baidu didn’t immediately comment on the decision.

Write to Jing Yang at Jing.Yang@wsj.com, Dawn Lim at dawn.lim@wsj.com and Gordon Lubold at Gordon.Lubold@wsj.com