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

By Michael Martina, David Shepardson and Karen Frefeld

WASHINGTON/NEW YORK (Reuters) – The U.S. Department of Defense said on Monday it has added gaming and social media leader Tencent Holdings (OTC: ) and battery maker CATL to a list of companies it says it does business with China’s military.

The list includes chipmaker Changxin Memory Technologies, Cocktail Wireless and drone maker Autel Robotics, according to a document published on Monday.

The annually updated list of Chinese military companies, formally known as the “Section 1260H List” of US law, named 134 companies, according to a notice posted to the Federal Register.

Shares of Hong Kong-listed Tencent fell as much as 7 percent in early trade, while shares of the company traded in the U.S., as well as the parent of Chinese instant messaging app WeChat, fell 8 percent in aftermarket trading. .

In a statement, Tencent said its inclusion on the list was “clearly erroneous.” “We are not a military company or supplier,” he added. As with sanctions or export controls, this list has no effect on our business.

CATL, the world’s biggest electric vehicle battery maker, whose Shenzhen-listed shares fell more than 5%, said it was “not engaged in any military-related activities”, calling the designation a mistake.

A spokesperson for Quetel said the company “does not work with the military in any country and is asking the Pentagon to reconsider its designation, which is clearly erroneous.” Quetel shares fell about 7 percent.

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

Impact on companies

The revised list is one of several steps taken by Washington in recent years to highlight and restrict Chinese companies it says pose a security threat amid strained relations between the two largest economies.

In a research note, Jefferies said the purpose of the China Military Companies (CMC) list is to express the views of the Defense Department, which will serve as a reference for other government departments.

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

Craig Singleton, a China expert at the Foundation for Democracy, said the additional US companies doing business with the growing Chinese corporations show “recklessness”.

“America is no longer waiting for a handful of technologies,” he said. “The garden of sensitive technologies is growing, and the fences protecting them are being strengthened. Today’s list makes it clear that these are not just commercial companies. They are critical partners for China’s military modernization, directly accelerating Beijing’s strategic ambitions.”

Other companies added include MGI Tech, which makes genomic sequencing equipment, and Origincell Technology, which lawmakers accused of developing cell banking networks and biostorage technologies. Neither firm immediately responded to a request for comment.

U.S. lawmakers pushed the Pentagon to add some companies, including CATL, to the list in 2024. Ford Motor Co. (NYSE: ) is building a battery plant in Michigan and plans to license CATL technology to produce low-cost lithium-ion batteries at the facility — a move that has raised concerns among some lawmakers. Ford did not immediately comment on Monday.

While the designation does not include immediate bans, it represents a serious warning to US entities and companies about the risks of doing business with the affected companies and damaging their reputations. It could increase pressure on the Treasury Department to impose sanctions on the companies.

Two previously listed companies, drone maker DJI and lidar maker Hesai Technologies, both sued the Pentagon last year over their earlier designations, but remain on the updated list.

The Pentagon also removed six companies it said did not meet the requirements of the deal, including AI firm Beijing MegVee Technology, China Railway Construction Corporation Ltd., China State Construction Group Co. and China Telecommunications Corporation.