The Pentagon on Monday designated Tencent, the Chinese social media and gaming giant, as a Chinese military company operating in the United States, the latest action in an escalating series of retaliatory moves between the world’s two superpowers.
Tencent shares in the United States fell about 10% after the Department of Defense decision, which also targeted Chinese battery, drone and charging companies.
The Department of Defense annually updates a list of what it calls “Chinese military companies,” entities it has identified as possessing military and commercial technology. There now 134 companies In the list published in the Federal Register. It also added Contemporary Amperex Technology Company, known as CATL, as well as China Overseas Shipping Company, known as COSCO; chipmaker Changxin Memory Technologies; and drone maker Autel Robotics. China Overseas Shipping is the largest shipping line in China and one of the largest in the world.
A company spokeswoman said in an emailed statement that Tencent’s inclusion on the list was a “clear error.” “We are not a military company or supplier.”
Tencent also said the listing “will have no impact on our business” and that it will “work with the Department of Defense to address any misunderstandings.”
This designation serves as a warning to companies in the United States that working with companies on the list may result in them being prevented from obtaining future Pentagon contracts.
To be added to the list, a company must have some business operations within the United States. For example, CATL licenses its battery technology to US automaker Ford Motor, which is building a $3.5 billion electric vehicle plant in Michigan.
A CATL spokesperson said the company “has never been involved in any military-related business or activities,” adding that the designation “does not prevent CATL from conducting business with entities other than the Department of Defense, and is expected to have no significant adverse impact.” On our business.” CATL intends to object to being added to the blacklist and said it may consider taking legal action.
Other companies added to the list did not immediately respond to requests for comment.
As tensions between the United States and China have risen in recent years, pressure has mounted from lawmakers to find ways to thwart China’s technological and military advances.
In 2021, Chinese consumer electronics company Xiaomi successfully sued the Pentagon to be removed from the blacklist after it argued in federal court that it had no ties to the Chinese military.
Recently, the two countries have engaged in mutual economic escalation. It began during President-elect Donald J. Trump’s first term, after he targeted China with tariffs and trade restrictions. At the time, Beijing took mostly symbolic and measured responses in retaliation.
Since then, the Biden administration has expanded its restrictions on Chinese companies and imposed a ban on dual-use products, recently targeting 140 Chinese companies. The administration said Thursday it was considering a new rule that could restrict or ban Chinese drones in the United States.
Beijing has adopted an increasingly aggressive stance as it prepares for a second presidential term with Mr. Trump, an outspoken critic of China and its economic power.
Chinese regulators announced an investigation into US computer chip company Nvidia, banned the export of rare earths to the US and took more severe strikes against individual companies to expose vulnerabilities in their supply chain.
Treasury Secretary Janet L. Yellen and her Chinese counterpart, He Leveng, held a virtual meeting on Monday, the latest in a series aimed at promoting discussions between economic policymakers in the two countries. According to a statement issued by the Treasury Department, both sides expressed concerns about escalating economic tensions. Ms. Yellen warned that Chinese policies affecting American companies and workers would continue to have a detrimental impact on the relationship between the United States and China, according to the reading.
Chinese state media reported that Al-Sayed raised concerns about the economic and trade restrictions imposed by Washington on China.