US adds Chinese giants Tencent, CATL to military-affiliation list
Photo shows people walking past the Tencent headquarters in Shenzhen in China's southern Guangdong province on July 10, 2022. (AFP Photo)
The U.S. Defense Department has included Chinese technology giant Tencent and leading battery manufacturer CATL on a list of companies it claims are affiliated with Beijing’s military, triggering sharp declines in both firms’ shares.
Tencent’s stock plunged more than seven percent in Hong Kong trading on Tuesday, while CATL saw a 5.2 percent drop in Shenzhen. The announcement comes ahead of the official publication of the updated list of Chinese military companies in the U.S. Federal Register, with copies already available for download.
The list stems from the National Defense Authorization Act of fiscal year 2021, which mandates the U.S. defense secretary to identify Chinese military-linked firms operating directly or indirectly within the United States. While the listing carries no direct legal consequences, it often harms the reputations of affected firms, some of which have previously challenged their inclusion in court.
Tencent, one of China’s foremost tech firms, operates the ubiquitous WeChat platform, along with offerings in gaming, content streaming, and cloud services. CATL, a global leader in electric vehicle battery production, supplies batteries to major international manufacturers, including Mercedes-Benz, BMW, Volkswagen, Toyota, Honda, and Hyundai.
Both companies have rejected the U.S. government’s claims. A Tencent spokesperson called the designation “clearly a mistake” and stated, “We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding.”
Similarly, CATL released a statement asserting its non-military status: “CATL is not engaged in any military-related activities. We welcome responsible discourse on our business operations and take questions about our business seriously.”
The U.S. government has increasingly targeted Chinese tech firms in recent years, citing national security concerns and the potential use of technology for military purposes by Beijing. This latest move underscores escalating tensions between the two economic powers, with China identified as Washington’s primary global rival.
The development sent ripples through the Hong Kong financial markets, where the Hang Seng Index opened Tuesday nearly one percent lower
