Chinese internet services provider Baidu (BIDU) shares fell 2.1% intraday on June 8, as the company’s name was added to the Department of Defense’s (DoD) list of Chinese military companies (CMC) operating in the U.S. Under the new criteria, which now include entities subject to the “direction or control of a greater number of Chinese administrative bodies and their affiliates,” the company is deemed to be indirectly linked to the State-Owned Assets Supervision and Administration Commission (SASAC) of the State Council of China.
This means Baidu could face procurement bans, supply chain exclusions, and investment restrictions. This heightened trade scrutiny might further spook investors, while the company goes through a slowdown in its legacy business. Beginning on June 30, the DoD will implement an "entity prohibition" that prohibits the department from directly contracting with any CMC or any organization controlled by a CMC.
