The U.S. has updated its list of Chinese companies alleged to have ties with the country’s military, adding prominent names such as Tencent, a leading gaming and social media firm, and CATL, a major battery manufacturer. This designation serves as a caution to American businesses and organizations, highlighting potential risks associated with partnering or conducting transactions with these Chinese entities.
Being added to the list doesn’t necessarily result in an immediate ban, but it can increase the likelihood of the U.S. Treasury Department imposing sanctions on these companies. Tencent and CATL have both denied any involvement with the Chinese military. In response, Beijing has criticized the move, labeling it as “unreasonable suppression” of Chinese businesses.
The Department of Defense’s annual list of Chinese military companies, officially referred to as the Section 1260H list, has been updated and now comprises 134 firms.
The list is a key component of Washington’s strategy to counter Beijing’s alleged attempts to bolster its military capabilities by leveraging technology from Chinese companies, universities, and research programs.
Tencent, the parent company of the messaging app WeChat, has disputed its inclusion on the list, calling it “clearly a mistake.” A spokesperson for the company clarified that “We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,” in a statement.
CATL has similarly contested its inclusion on the list, asserting that it is a mistake and emphasizing that the company “is not engaged in any military related activities.” Meanwhile, Liu Pengyu, a spokesperson for the Chinese embassy in Washington, criticized the U.S. move, stating “The US’s practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States.”
The Pentagon’s decision to add certain firms, including CATL, to the list was prompted by pressure from U.S. lawmakers. This development comes as Ford, a U.S. automotive giant, announced plans to invest $2bn in a battery plant in Michigan, with intentions to license technology from CATL.
Tensions between the world’s two largest economies continue to simmer. This latest development comes as President-elect Donald Trump, known for his tough stance on Beijing, is set to return to the White House this month.
The Pentagon’s updated list has led to significant market reactions. Tencent’s shares fell around 7% in Hong Kong on Tuesday, while CATL’s shares dropped by about 4%. This comes after the Pentagon added several Chinese companies, including Tencent and CATL, to its list. Drone maker DJI and Lidar-maker Hesai Technologies, which sued the Pentagon last year over their inclusion, remain on the list.
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