WASHINGTON: The US Defense Department said on Monday (Jan 6) it had added Chinese tech giants including gaming and social media leader Tencent Holdings and battery maker CATL to a list of firms it says work with China’s 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 annually updated list of Chinese military companies, formally mandated under US law as the “Section 1260H list,” designated 134 companies, according to a notice posted to the Federal Register.
The Hong Kong-listed shares of Tencent fell as much as 7 per cent in early trade, while the US-traded shares of the company, which is also the parent of Chinese instant messaging app WeChat, fell 8 per cent 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, the world’s largest electric vehicle battery maker whose Shenzhen-listed shares dropped more than 5 per cent, also 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”. Quectel’s shares fell nearly 7 per cent.
The other companies and the Chinese embassy in Washington did not immediately respond to requests for comment.
IMPACT ON COMPANIES
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, weighing on strained relations between the world’s two biggest economies.
Jefferies said in a research note the purpose of the Chinese Military Companies (CMC) list was to express the opinion of the Defense Department which could serve as a reference for other government departments.
“The most serious consequence for CMC companies is US investment ban, but it’s all up to Trump and his team.”
