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Chinese Tech Giants Push Back Against US Military Ties Claims

AInvestTuesday, Jan 7, 2025 5:20 am ET
2min read


In a surprising turn of events, several Chinese tech giants, including Tencent and CATL, have found themselves on the US Defense Department's list of "Chinese Military Companies," prompting a wave of protests and denials from the affected companies. The US has been increasingly restrictive in sharing advanced technology, deeming it a threat to national security, and the latest revision of the list includes 134 companies. The National Defense Authorization Act of 2024 bans the Department of Defense from dealing with these designated companies beginning in June 2026.

Tencent, the world's largest video gaming company and operator of the popular messaging platform WeChat, saw its Hong Kong-traded shares fall 7.3% following the announcement. The company maintains that its inclusion on the list is a mistake and has vowed to initiate a reconsideration process to correct the error. Tencent's statement reads, "As the company is neither a Chinese military company nor a military-civil fusion contributor to the Chinese defense industrial base, it believes that its inclusion in the CMC List is a mistake." The company also noted that the designation relates only to US defense procurement, which does not affect its business operations.

CATL, the world's largest electric vehicle battery maker, also found itself on the list and has stated that the designation would not have an adverse impact on its operations. The company maintains that it has never engaged in any military-related business or activities and has proactively engaged with the DoD to address the false designation. CATL's stock fell 2.84% in Shenzhen following the announcement.

SenseTime, an AI company, has also been included on the list and has firmly disagreed with the decision, stating that it has no factual basis. The company maintains that the decision has no material impact on its global operations and remains committed to working collaboratively with relevant stakeholders to address the matter.

The Chinese Ministry of Foreign Affairs has urged the US to immediately correct its wrong practices and lift the illegal unilateral sanctions and long-arm jurisdiction on Chinese companies. Spokesperson Guo Jiakun stated, "China consistently and firmly opposes the US overstretching the concept of national security, creating discriminatory lists under various pretexts, and unwarrantedly suppressing Chinese companies, hindering China’s high-quality development."



The inclusion of these companies on the US list may have significant implications for their global operations and partnerships, particularly with US-based entities. Tencent, CATL, and SenseTime may face cautiousness among US-based partners and investors due to the reputational damage and potential restrictions on US defense procurement. For instance, Ford Motor's plans to license CATL technology for a battery plant in Michigan may face scrutiny from US lawmakers, highlighting the potential challenges these companies might face in maintaining and expanding their partnerships with US entities.

To address the false designations and protect their interests, both in the US and internationally, these companies can take several strategic moves. Firstly, they can initiate a reconsideration process and take legal action if necessary to challenge their inclusion on the list. Secondly, they can engage with relevant stakeholders, including US authorities, international partners, and other relevant parties, to clarify the situation and protect their interests. Thirdly, these companies can proactively demonstrate their compliance with relevant regulations and provide transparency in their operations to reassure international partners and investors. Lastly, these companies can explore opportunities to diversify their business operations and expand into other markets to reduce dependence on US defense procurement and insulate themselves from potential disruptions caused by US policies.

In conclusion, the inclusion of Chinese tech giants like Tencent, CATL, and SenseTime on the US Defense Department's list of "Chinese Military Companies" has sparked a wave of protests and denials from the affected companies. While the long-term impacts on their reputations and stock performance remain to be seen, these companies face potential consequences if the US government decides to impose sanctions or other restrictions. To mitigate these risks, these companies must take strategic moves to address the false designations and protect their interests, both in the US and internationally.
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