US adds Tencent, CATL to list of Chinese firms allegedly aiding Beijing’s military By Reuters

By Michael Martina, David Shepardson and Karen Freifeld

WASHINGTON/NEW YORK (Reuters) – The U.S. Defense Department said on Monday it has added Chinese tech giants including games and social media leader Tencent Holdings (OTC:) and battery maker CATL on a list of firms it says work with the Chinese military.

The list also included chip maker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics, according to a document published on Monday.

The updated annual list of Chinese military companies, officially designated under US law as the “Section 1260H List,” has identified 134 companies, according to a notice sent to Federal Register.

Hong Kong-listed shares of Tencent fell nearly 7% in early trade, while US-traded shares of the company, which is also the parent of Chinese messaging app WeChat, fell 8% in late trade. for sale. .

Tencent said in a statement that its inclusion on the list “was a clear mistake.” It added: “We are not a military company or a trader. Unlike sanctions or export controls, this list has no effect on our business.”

CATL, the world’s largest maker of electric vehicle batteries whose Shenzhen-listed shares fell more than 5%, also called the name a mistake, saying it “does not engage in any activities related to military.”

A spokesperson for Quectel said the company “does not work with the military in any country and will ask the Pentagon to re-evaluate its name, which is clearly mistaken.” Quectel shares fell nearly 7%.

Other companies and the Chinese embassy in Washington did not immediately respond to requests for comment.

SERVICE COMPANIES

The updated list is one of many actions taken by Washington in recent years to highlight and block Chinese companies it says pose security risks, affecting strained relations between the two countries. the largest economies in the world.

Jefferies said in a research note that the purpose of the China Military Companies (CMC) list was to present a view of the Defense Department that could serve as a benchmark for other government departments.

“The most serious consequences for CMC companies is the US investment ban, but it’s all on Trump and his team.”

Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions showed it was “reckless” for American firms to do business with a growing number of Chinese businesses.

“The US is no longer just protecting a few technologies,” he said. “The garden of sensitive technologies is growing, and the fence that protects them is being strengthened. Today’s list reveals that these are not just commercial companies. They are important contributors to the development of the military of China, directly influencing Beijing’s strategic ambitions.”

Other companies included include MGI Tech, which makes genetic sequencing equipment, and Origincell Technology, which lawmakers say operates a network of cell banking and bio-storage technologies. Neither firm immediately responded to requests for comment.

US lawmakers had pushed the Pentagon through 2024 to add some of the companies, including CATL, to the list. Ford Motor (NYSE: ) is building a battery plant in Michigan and plans to license CATL’s technology to produce low-cost lithium-iron batteries at the facility – a move that has raised concerns among lawmakers others. Ford did not immediately comment on Monday.

While this designation does not entail immediate bans, it may tarnish the reputation of the companies concerned and provide a strong warning to US organizations and firms about the risks of doing business with them. It could also increase pressure on the Treasury Department to license companies.

The two companies previously listed, drone maker DJI and Lidar-maker Hesai Technologies, both sued the Pentagon last year over their previous designations, but remain on the updated list.

The Pentagon also removed six companies it said no longer met the requirements for designation, including AI firm Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co and China Telecommunications Corporation.