Chinese biotech firms led by WuXi Biologics sink in Hong Kong as proposed US bill cites complicity with PLA

Chinese biotechnology companies slumped in Hong Kong by the most in nearly two years, after a US lawmaker proposed a bill to block US companies from doing business with them, citing their alleged complicity with the military.

WuXi Biologics crashed by nearly a fifth, leading the plunge.

China seeks to dominate biotechnology as an industry of the future and the nation’s biotech firms “have repeatedly collaborated with PLA [the People’s Liberation Army] entities” with power to compel them to turn over their data, according to a bill moved by Republican Mike Gallagher of Wisconsin and Democrat Raja Krishnamoorthi of Illinois this week.

The bill cited Third Military Medical University and Key Laboratory of High-Altitude Medicine, entities it said are “an espionage tool” of the Communist Party. Other entities mentioned include BGI, formerly known as Beijing Genomics Institute, and Wuxi Apptec, a sister company of Wuxi Biologics.

The move represents an escalation in Washington’s technology ban on Chinese companies, broadening the ongoing sanctions in sectors ranging from hi-tech, semiconductors and cotton production over various economic and political reasons.

The Chinese biotech industry had remained largely unscathed, until the latest provocation. It is further evidence that Washington’s “small yard and high fence” strategy is getting tighter, not easier, despite the summit involving presidents Xi Jinping and Joe Biden in California last November.

The Hang Seng HK-Listed Biotech Index, which tracks 50 of the largest companies in the biotech, pharmaceuticals and medical devices industries, tumbled 6 per cent, the biggest drop since March 2022.

WuXi Biologics, the biggest index member, sank 18 per cent, the most since December 4, losing HK$24.4 billion (US$3.1 billion) of market value.

Wuxi Apptec, a sister company, also plunged 18 per cent, to HK$63.70.