The Pentagon has designated Tencent, the Chinese social media and gaming company, as a Chinese military business operating within the United States. This action is part of a broader series of retaliatory measures between the United States and China.
Following the Defense Department's announcement, Tencent's shares in the United States fell by nearly 10 percent. The Pentagon's list, which is updated annually, now includes 134 companies identified as having both military and commercial technology. Other companies added to the list include Contemporary Amperex Technology Company (CATL), units of China Overseas Shipping (COSCO), Changxin Memory Technologies, and Autel Robotics.
A spokeswoman for Tencent stated that the designation was "clearly a mistake," asserting that the company is not a military entity. Tencent also indicated that the listing would not affect its business and expressed willingness to collaborate with the Department of Defense to clarify any misunderstandings.
The inclusion of a company on the list serves as a warning to U.S. businesses that partnerships with these entities could result in exclusion from future Pentagon contracts. To qualify for the list, a company must have operational ties to the United States, as seen with CATL, which is licensing battery technology to Ford Motor Company for a new electric vehicle factory in Michigan.
Shares of Tencent and CATL experienced declines during trading in Asia. CATL has not yet responded to requests for comment.
As tensions between the U.S. and China have intensified, there has been increasing pressure from lawmakers to counter China's technological and military advancements. In 2021, Xiaomi successfully litigated against the Pentagon to remove itself from the blacklist, claiming no military affiliations.
The economic rivalry has escalated since the first term of President Donald Trump, who implemented tariffs and trade restrictions against China. The Biden administration has since broadened these restrictions, recently targeting 140 Chinese companies and considering new regulations that could limit or ban Chinese drones in the U.S.
In response, Beijing has adopted a more aggressive posture, launching investigations into American companies and restricting exports of rare minerals to the U.S. Chinese regulators have also targeted specific companies to highlight vulnerabilities in their supply chains.
On Monday, U.S. Treasury Secretary Janet L. Yellen and her Chinese counterpart, He Lifeng, held a virtual meeting aimed at addressing economic tensions. According to a Treasury Department readout, both parties expressed concerns regarding the impact of rising economic tensions, with Yellen warning that Chinese policies affecting American businesses would harm U.S.-China relations. He raised issues regarding U.S. economic and trade restrictions on China, as reported by Chinese state media.