Alibaba (BABA) and Baidu (BIDU) suffered a brief sell-off early Friday after the Department of Defense issued—and then quickly retracted—a list of companies that are aiding the Chinese military.
After pulling the list of targeted companies, the Pentagon issued a statement to Bloomberg that it had “nothing to announce at this time,” raising questions if the retraction was intentional before President Trump’s visit to China in April or whether it was posted in error.
Along with the addition of Alibaba (BABA) and Baidu (BIDU), the Pentagon removed ChangXin Memory Technologies – China’s largest manufacturer of memory chips — and CCP-backed Yangtze Memory Technologies from Section 1260H restrictions, enabling the adoption of Chinese DRAM and NAND in U.S. consumer products.
Companies that landed on the Pentagon’s Section 1260H list were labeled as “Communist Chinese Military Companies,” considered threats to U.S. security, and prevented from operating in the U.S., either directly or indirectly, and restricted from receiving research funding. The list now contains more than 130 entities accused of associations with China’s military.
Both Alibaba (BABA) and Baidu (BIDU) reject any claim of military association and maintain that products on their respective websites are “designed for civilian use only.”
“We are a publicly listed company…and will not hesitate to use all options available to us to have the company removed from the list,” Baidu said to Bloomberg.
Moreover, China’s Foreign Ministry said it will “take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.”