Americans will not be prohibited from investing in Alibaba, Tencent and Baidu

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The US government is expected to allow Americans to continue investing in Chinese tech giants Alibaba Group Holding Ltd. BABA, + 5.25%, Tencent Holdings Ltd. TCEHY, + 3.65%, and Baidu Inc. BIDU, + 0.02% after weighing the alleged companies ties to the Chinese military against the possible economic impact of banning them. Alibaba and Baidu, which are listed in New York, and Tencent, which is listed in Hong Kong, were among a dozen companies being vetted for inclusion on a Department of Defense list of companies deemed to support services. China’s military, intelligence and security services, according to people familiar with the matter. US investors have until November to divest their holdings in any listed company.

The United States no longer plans to add the three companies to the list. Another nine Chinese companies will be added, as well as more than 100 subsidiaries of companies already on the list, the people said. The decision closes a week-long battle pitting Treasury officials, who feared sell-offs and economic fallout, against State Department and Pentagon officials seeking a tougher line against Beijing. As of Wednesday morning, many in the State Department and the Pentagon believed they had a compelling case for companies to be included once administrative issues were resolved, people familiar with the matter said. An expanded version of this story appears on WSJ.com Popular WSJ.com Stories: