FRED DUFOUR/AFP/Getty

U.S.-listed shares for some of China's biggest companies were marked sharply lower Tuesday following a Bloomberg report that suggested the White House was looking at ways to limit investment in Chinese firms by government pension funds.

Bloomberg said the move, designed to restrict capital flows into China, is part of broader effort by the White House to tackle challenges linked to that country's capital markets, where Chinese officials to lift restrictions on foreign investment in their domestic markets.

Alibaba Holding Co. (BABA - Get Report) shares were marked 2.64% lower in pre-market trading following the report to indicate an opening bell price of $163.88 each. Shares in Baidu (BIDU - Get Report) were seen 1.95% lower at $99.49 while JD.com (JD - Get Report) slipped 1.87% to $28.31 each.

White House economic adviser Larry Kudlow told reporters in Washington Monday that a U.S. plan to force the de-listing of China stocks on U.S. exchanges is "not on the table" heading into trade talks with senior officials from Beijing later this week at the White House.

"What we're looking at, actually, is investor protection, U.S. investor protections (as well as)  transparency and compliance with a number of laws," Kudlow said.

The Bloomberg report followed last night's decision by the U.S. Commerce Department to blacklist several China-based tech companies that could affect this week's crucial trade talks in Washington.

The Commerce Department unveiled the blacklist late Monday, targeting China-based tech firms operating in the artificial intelligence space that were deemed to have been "implicated in human rights violations ... against Uighurs, Kazakhs, and other members of Muslim minority groups."

The censure prevents the eight firms from buying components from U.S. firms without prior government permission, but perhaps more importantly comes just days ahead of high-level trade talks between the world's two largest economies in Washington and could spark reprisals against U.S firms from Beijing.

"The U.S. Government and Department of Commerce cannot and will not tolerate the brutal suppression of ethnic minorities within China," Commerce Secretary Wilbur Ross said in a statement.