The U.S. Department of Defense said Monday it has added Chinese tech giants, including video game and social media leader Tencent Holdings and battery maker CATL, to a list of companies it says are working with the Chinese army.
The list also included chipmaker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics, according to a document released Monday.
The annually updated list of Chinese military companies, officially mandated by U.S. law as the “Section 1260H list,” named 134 companies, according to a notice published in the Federal Register.
U.S.-traded shares of Tencent, which is also the parent company 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 an error.” “We are neither a company nor a military supplier. Unlike sanctions or export controls, this listing has no impact on our activities,” he adds.
CATL called the designation an error, saying it “is not engaged in any military activity.”
A Quectel spokesperson said the company “does not work with any country’s military and will ask the Pentagon to reconsider its designation, which was clearly made in error.”
The other companies and the Chinese Embassy in Washington did not immediately respond to requests or comment.
Amid tense relations between the world’s two largest economies, the updated list is one of several steps Washington has taken in recent years to highlight and restrict Chinese companies it says pose risks to security.
Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions showed it was “unwise” for American companies to do business with a growing number of Chinese companies.
“The United States no longer protects just a handful of technologies,” he said. “The garden of sensitive technologies is growing and the barrier that protects them is being strengthened. Today’s list shows that these are not just commercial enterprises. They are essential enablers of the military modernization of China, directly fueling Beijing’s strategic ambitions.”
Other companies added include MGI Tech, which makes genomic sequencing instruments, and Origincell Technology, which lawmakers say operates a network of cell banks and bio-storage technologies. Neither company immediately responded to requests for comment.
American lawmakers had been pushing the Pentagon throughout 2024 to add certain companies, including CATL, to the list. Ford Motor is building a battery factory in Michigan and plans to license CATL technology to produce low-cost lithium-iron batteries at that facility — a move that has raised concerns among some lawmakers. Ford had no immediate comment Monday.
Although this designation does not result in an immediate ban, it may be a serious blow to the reputation of the companies involved and serves as a stark warning to U.S. entities and businesses about the risks of doing business with them. It could also increase pressure on the Treasury Department to sanction 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 delisted six companies that it said no longer met the requirements for the designation, including artificial intelligence company Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co and China Telecommunications Corporation.