China vows to protect firms, decries US ban

China said yesterday that it would take necessary measures to safeguard companies’ rights and interests in response to the United States considering adding Alibaba and Tencent to a China stock ban.

The Trump administration is considering adding tech giants Alibaba and Tencent to a blacklist of firms allegedly owned or controlled by the Chinese military, two people familiar with the matter said on Wednesday.

The crackdown move from the US government shows its double standards on the free market economy and fair competition, the Chinese foreign ministry spokeswoman Hua Chunying said at a regular news briefing yesterday.

Targeting Asia’s two most valuable companies would be US President Donald Trump’s most dramatic step yet in a recent raft of measures unleashed against Chinese companies.

Defense Department officials, who oversee the blacklist designations, have not yet finalized plans and are also discussing adding other Chinese firms to the list, the sources said, speaking on condition of anonymity.

Both companies declined to comment. The discussions were first reported by the Wall Street Journal.

Some investors expressed skepticism, however, that Alibaba and Tencent would face long-term restrictions — given that they are worth a combined US$1.3 trillion, widely held by US investors and the likely reputational and financial hit to US stock markets.

“It’s a very bad policy and there’s enough money in Asia, lots and getting bigger, that one shouldn’t force these companies out of America,” said Thomas Caldwell, chairman of Caldwell Investment Management in Toronto and a New York Stock Exchange investor. “Money and markets should be neutral.”

Trump escalated measures against Chinese firms in November with an executive order that bans US investors from buying shares of Chinese firms.

On Tuesday, he ordered a ban on transactions with eight Chinese software applications, including Ant Group’s Alipay mobile payment app and Tencent’s QQ Wallet and WeChat Pay.

The November executive order sought to give teeth to a 1999 law that tasked the Defense Department with drafting a list of Chinese firms deemed to be owned or controlled by the Chinese military.

The Pentagon has so far blacklisted 35 firms, including China’s top chipmaker SMIC and oil giant CNOOC.