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Tech group Tencent and the world’s leading battery maker CATL are among a number of Chinese companies designated by the Pentagon as having possible military connections, sending the industry giants’ stock prices plummeting.
Tencent’s U.S.-listed shares fell 7.8% on the news and fell by the same amount in Hong Kong trading on Tuesday. The company is China’s largest company by market capitalization.
In the Shenzhen market, CATL stock fell by as much as 6%, the largest decline in about three months. CATL is an important supplier to US automaker Tesla, and has a global market share of approximately 38% for EV batteries.
The list is part of the U.S. government’s broader efforts to counter China’s rise as a military power. Starting in June 2026, the Department of Defense will no longer be able to contract with companies on the list, and starting in 2027, it will no longer be able to procure goods or services whose supply chains include those companies.
The Pentagon describes the list as a means to emphasize and counter what it calls China’s “civil-military fusion strategy.” The strategy will strengthen China’s military modernization efforts by ensuring access to advanced technologies from Chinese companies, universities, and research programs. Hidden as a civilian.
The United States has imposed multiple rounds of comprehensive export controls aimed at curbing the capabilities of China’s advanced semiconductor industry and making it more difficult for China to develop artificial intelligence for military use. .
In retaliation, the Chinese government has tightened its own export controls. Last month, it banned certain minerals and metals used in semiconductor manufacturing and military equipment from being shipped to the United States.
China’s Ministry of Foreign Affairs said on Tuesday that the Chinese government “has always firmly opposed the generalization of the concept of national security by the United States, the creation of discriminatory lists of various names (and) the unjust suppression of Chinese enterprises.” Ta. China will “resolutely protect the legitimate rights and interests of Chinese enterprises and safeguard their legitimate right to development,” he warned.
Addition to the Pentagon’s blacklist of Chinese military companies has no direct legal consequences and does not result in sanctions. However, it comes with reputational risk.
Tencent’s addition to the list is “clearly a mistake,” a company spokesperson said.
“We are not a military company or military supplier. Unlike sanctions and export controls, this listing does not affect our business. We will nevertheless work with the Department of Defense to address any misconceptions.” the spokesperson added.
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CATL, which is working with Tesla and Ford to license battery manufacturing technology for U.S. factories, also called the listing a “mistake.”
“CATL is not involved in any military-related activities,” the company said. “We welcome responsible discussion about our business operations and take questions about our business seriously.”
Chip maker ChangXin Memory Technologies, drone maker Autel Robotics and IT equipment maker Quectel Wireless Solutions also joined the list.
Cosco, one of China’s largest shipping companies, joins the list for the first time. Some of the group’s ferries, along with ferries from other commercial companies, are participating in People’s Liberation Army exercises training for an amphibious invasion of Taiwan, according to ship tracking data and reports in Chinese state media.
In recent years, the Chinese government has required private shipping companies to build new ships to military standards. The use of civilian shipping is an important part of the PLA’s strategy, as the PLA itself does not have sufficient capacity to transport troops and armored vehicles across the Taiwan Strait.
Additional reporting by Joe Leahy in Beijing and Kathrin Hille in Taipei
