The U.S. Defense Department said on Monday it has added Chinese tech giants including gaming and social media leader Tencent Holdings (0700.HK) and battery maker CATL (300750.SZ) to a list of firms it says work with China's military.
The list also included chip maker Changxin Memory Technologies, Quectel Wireless (603236.SS) and drone maker Autel Robotics (688208.SS), according to a document published on Monday.
The annually updated list of Chinese military companies, formally mandated under U.S. law as the "Section 1260H list," designated 134 companies, according to a notice posted to the Federal Register.
U.S.-traded shares of Tencent, which is also the parent of Chinese instant messaging app WeChat, fell 8% in over-the-counter trading. Tencent said in a statement that its inclusion on the list was "clearly a mistake." It added: "We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business."
CATL called the designation a mistake, saying it "is not engaged in any military related activities."
A Quectel spokesperson said the company "does not work with the military in any country and will ask the Pentagon to reconsider its designation, which clearly has been made in error."
The other companies and the Chinese embassy in Washington did not respond to requests or did not immediately comment.
Amid strained relations between the world's two biggest economies, the updated list is one of numerous actions taken by Washington in recent years to highlight and restrict Chinese companies it says pose security risks.
Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions showed that it was "reckless" for American firms to conduct business with a growing swath of Chinese corporations.
"The U.S. isn’t just safeguarding a handful of technologies anymore," he said. "The garden of sensitive technologies is growing, and the fence protecting them is being fortified. Today's list lays bare that these aren’t just commercial companies. They’re critical enablers of China’s military modernization, directly fueling Beijing’s strategic ambitions."
Other companies added include MGI Tech, which makes genomic sequencing instruments, and Origincell Technology, which lawmakers have alleged operates a cell bank network and bio-storage technologies. Neither firm immediately responded to requests for comments.
U.S. lawmakers had pushed the Pentagon throughout 2024 to add some of the companies, including CATL, to the list. Ford Motor (F.N) is building a battery plant in Michigan and plans to license CATL technology to produce low-cost lithium-iron batteries at the facility - a move that has sparked concerns by some lawmakers. Ford did not immediately comment on Monday.
While the designation does not involve immediate bans, it can be a blow to the reputations of affected companies and represents a stark warning to U.S. entities and firms about the risks of conducting business with them. It could also add pressure on the Treasury Department to sanction the companies.
Two previously listed companies, 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 the designation, including AI firm Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co and China Telecommunications Corporation.
