The Pentagon on Monday labeled Tencent, the Chinese social media and gaming giant, as a Chinese military company operating in the United States, the latest move in an escalating series of retaliatory actions between the world's two superpowers.
Shares of Tencent in the United States fell almost 10 percent after the Defense Department's decision, which also targeted Chinese battery, drone and shipping companies.
The Department of Defense annually updates a list of what it labels “Chinese military companies,” entities it has identified as having both military and commercial technology. There are now 134 companies on the list, which has been placed in the Federal Register. It also added Contemporary Amperex Technology Company, known as CATL, as well as units of China Overseas Shipping, known as COSCO; the chipmaker Changxin Memory Technologies; and the drone maker Autel Robotics. China Overseas Shipping is one of the largest shipping companies in the world.
Putting Tencent on the list was “clearly a mistake,” a company spokeswoman said in an emailed statement. “We are not a military company or supplier.”
Tencent also said the listing would have “no impact on our business” and that it would “work with the Department of Defense to resolve any misunderstandings.”
The designation is a warning to companies in the United States that cooperation with companies on the list could cause them to be excluded from future Pentagon contracts.
To be added to the list, a company must have some business operations in the United States. For example, CATL licenses its battery technology to US automaker Ford Motor, which is building a $3.5 billion electric vehicle factory in Michigan.
Shares of Tencent, which is listed in Hong Kong, and CATL, which trades in Shenzhen, China, fell in trading in Asia.
CATL did not immediately respond to a request for comment.
As tensions between the United States and China have escalated in recent years, pressure has increased from lawmakers to find ways to thwart China's technological and military advances.
In 2021, Chinese consumer electronics company Xiaomi successfully sued the Pentagon to be removed from the blacklist after arguing in federal court that it had no ties to the Chinese military.
More recently, the countries have been engaged in an escalating economic tit-for-tat. It started during newly elected President Donald J. Trump's first term, after he targeted China with tariffs and trade restrictions. At that time, Beijing's response was mainly symbolic and measured in retaliation.
Since then, the Biden administration has expanded its restrictions on Chinese companies and imposed a ban on dual-use items, recently targeting 140 Chinese companies. On Thursday, the administration said it was considering a new rule that could restrict or ban Chinese drones in the United States.
Beijing has taken an increasingly aggressive stance as it prepares for a second presidential term with Trump, an outspoken critic of China and its economic power.
Chinese regulators have announced an investigation into U.S. computer chip company Nvidia, banned the export of rare minerals to the United States and stepped up targeted attacks on individual companies to expose vulnerabilities in their supply chains.
Janet L. Yellen, the Treasury Secretary, and her Chinese counterpart, He Lifeng, held a virtual meeting on Monday, the latest in a series aimed at promoting discussions among the countries' economic policymakers. According to a statement from the Ministry of Finance, both sides expressed concern about rising economic tensions. Ms. Yellen warned that Chinese policies affecting American companies and workers would continue to have a damaging impact on the relationship between the United States and China, the lecture said.
Mr He expressed concern about Washington's economic and trade restrictions on China, Chinese state media reported.
