New Delhi, Nov. 9 -- Chinese biotechnology company WuXi AppTec has been removed from the Pentagon's list of Chinese military companies, offering relief to a business that has faced growing scrutiny in Washington over its links to China's pharmaceutical and biotechnology industries. The development comes as the company enjoys a strong stock market rally, even as investors increase bets that its shares could fall.

The removal, confirmed in a government posting on Monday, is significant for WuXi AppTec, which has become an important partner for pharmaceutical companies worldwide. The company has faced concerns over its alleged connections to China's military and the potential impact of US restrictions on its business.

WuXi AppTec had chall...