Reuters USA added Tencent, CATL to list of Chinese companies allegedly helping Beijing’s military

Authors: Michael Martina, David Shepardson and Karen Freifeld

WASHINGTON/NEW YORK (Reuters) – The U.S. Defense Department said on Monday it had added Chinese tech giants including gaming and social media leader Tencent Holdings ( OTC: ) and battery maker CATL to a list of companies it said were working with China’s military.

The list also includes chip maker Changxin Memory Technologies, Quectel Wireless and drone maker Autel Robotics, according to the document released Monday.

The annually updated list of Chinese military companies, officially authorized under U.S. law as the “Section 1260H List,” identified 134 companies, according to a notice published in the Federal Register.

Shares of Hong Kong-listed Tencent fell as much as 7% in early trading, while shares of the US-traded company, which is 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 list has no impact on our business.”

CATL, the world’s largest maker of electric vehicle batteries, whose Shenzhen-listed shares fell more than 5%, also called the designation a mistake, saying it was “not engaged in any military activities.”

A Quectel spokesman said the company “does not work with the military in any country and will ask the Pentagon to review its designation, which was apparently made in error.” Quectel shares fell almost 7%.

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 a number of actions Washington has taken in recent years to highlight and restrict Chinese companies it says pose security risks, straining strained relations between the world’s two largest economies.

Jefferies said in a research note that the purpose of the list of Chinese military companies (CMC) was to express the opinion of the Ministry of Defense which could serve as a reference to other government departments.

“The most serious consequence for CMC companies is the ban on investment in the US, but it’s all up to Trump and his team.”

Craig Singleton, a China expert at the Foundation for Defense of Democracies, said the additions show it is “reckless” for American companies to do business with a growing number of Chinese corporations.

“The US is no longer guarding just a handful of technologies,” he said. “The garden of sensitive technologies is growing and the fence protecting them is being strengthened. Today’s list reveals that these are not just commercial companies. They are key drivers of China’s military modernization, directly fueling Beijing’s strategic ambitions.”

Other companies added include MGI Tech, which makes instruments for genome sequencing, and Origincell Technology, which lawmakers say operates a network of cell banks and biological storage technologies. Neither company immediately responded to requests for comment.

US lawmakers pushed the Pentagon during 2024 to add some of the companies, including CATL, to the list. Ford Motor (NYSE: ) 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 raised concerns among some lawmakers. Ford had no immediate comment Monday.

While the designation does not carry immediate bans, it can be a reputational blow to the affected companies and serves as a stark warning to US entities and companies about the risks of doing business with them. It could also increase pressure on the Finance Ministry to sanction companies.

The 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 were no longer eligible for designation, including AI firm Beijing Megvii Technology, China Railway Construction Corporation Limited, China State Construction Group Co and China Telecommunications Corporation.