The Trump administration is considering adding tech giants Alibaba and Tencent to the U.S. blacklist of companies allegedly owned or controlled by the Chinese military.
The move would fuel tensions with Beijing days before Us President-elect Joe Biden takes office.
Defense Department officials, who are overseeing the selection, have not finished their plans to add companies and are also discussing the addition of other Chinese companies.
In the case of the addition, Alibaba and Tencent are subject to an executive order signed by President Trump in November, which prohibits U.S. investors from purchasing shares of blacklisted companies from November 2021.
Trump unleashed a series of tough measures against Chinese companies in his final days at the White House as he seeks to consolidate his hard-line legacy, as Beijing and Washington clash over the Coronavirus and the Chinese campaign against Hong Kong.
President Trump signed an executive order banning transactions with eight Chinese software applications, including Alipay's Alipay mobile app, Tencent's Alipay, QQ Wallet and Tencent's WeChat Pay.
Some investors have expressed doubts that Tencent and Alibaba are subject to long-term U.S. restrictions, as they are private companies widely owned by U.S. and international investors.
The Executive Order of November sought to give power to a 1999 law that mandated the Defense Ministry to draft a list of Chinese companies believed to be owned or controlled by the Chinese military.
The Pentagon, which complied with the mandate last year, blacklisted 35 companies, including China's largest chip maker SMIC and oil giant CNOOC.
Confusion over the scope of the November executive order has led to dramatic volatility on the NEW York Stock Exchange in recent days.
The NYSE announced plans to write off China Mobile, China Telecom and China Unicom, and S&P and Dow Jones indices followed the NYSE, saying they would remove U.S. deposit receipts for these three telecommunications companies.
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