Tencent Shares Decline After US Adds Company to Chinese Military Blacklist

It’s unclear whether either company deals regularly with the PLA. Beyond direct ties to the government, US officials have pointed to laws that require Chinese companies to share information with Beijing on matters deemed relevant to national security.

In August, lawmaker Marco Rubio — nominated to become US secretary of state in the Trump administration — asked the Pentagon to target CATL because of its potential to become a vital supplier to the PLA.

CATL also said it was “a mistake” to include its name on the Defense Department list. The company said in a statement that it’s not engaged in military-related activities, was privately founded and became a publicly listed company in 2018.

‘No Impact’

“We are not a military company or supplier,” a Tencent spokesperson said. “Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding.”

Some Chinese firms have successfully fought to be removed from the US list. In 2021, the smartphone giant Xiaomi Corp. managed to reach an agreement with the US government that set aside its designation as a Chinese military company. Last year, Advanced Micro-Fabrication Equipment Inc. was removed, doing away with a label the firm had described as an “irrational” designation.

The move against Tencent follows a difficult few years for Chinese tech companies, which first weathered a blistering Beijing-led crackdown on the internet before grappling with a severe domestic economic downturn. The social media and entertainment leader has, however, fared better than rivals — in part because of its lineup of games and growth in its fintech division. Its Hong Kong-listed stock gained more than 42% last year.

The Chinese military company list stems from an order signed by Trump in late 2020 that barred American investment in Chinese firms owned or controlled by the military. It was part of a broader effort to rein in what the US had described as Beijing’s abusive business practices.

The Defense Department noted in the Federal Register filing that companies included on the list are entitled to request reconsideration.

In the same statement, the department removed several firms from the list, including AI firm Beijing Megvii Technology Co., China Marine Information Electronics Co., China Railway Construction Corp., China State Construction Group Co., China Telecommunications Corp. and ShenZhen Consys Science & Technology Co.

–With assistance from Yiqin Shen, Edwin Chan, Andrew Pollack and Nick Turner.

(Updates with share action from the second paragraph. A previous story corrected “Pentagon” spelling.)

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