The U.S. Department of Defense has expanded its list of Chinese companies with alleged military connections, adding major tech firms Tencent, SenseTime, and battery maker CATL.
Key developments: The Defense Department’s “Chinese Military Companies” (CMC) list has grown to include 134 companies, triggering significant market reactions and corporate protests.
- Under the National Defense Authorization Act of 2024, the Defense Department will be prohibited from conducting business with listed companies starting June 2026
- Tencent’s stock experienced a sharp 7.3% decline following the announcement, while CATL shares fell 2.84% in Shenzhen trading
- The affected companies strongly deny any military connections, with Tencent describing the designation as a “mistake” and seeking to have the decision reversed
Corporate responses and impact: Major Chinese technology and industrial leaders have issued strong denials of military ties while facing immediate market consequences.
- CATL, the world’s largest electric vehicle battery manufacturer, explicitly rejected claims of military connections
- SenseTime, a prominent artificial intelligence company, contested its inclusion on the list
- The designations could significantly impact these companies’ ability to conduct business with U.S. entities and access American technology
Diplomatic tensions: China’s government has responded forcefully to the U.S. action, highlighting escalating technology-related conflicts between the two nations.
- The Chinese Foreign Ministry demanded immediate correction of what it termed “wrong practices” and called for lifting sanctions on Chinese companies
- Chinese officials accused the U.S. of “overstretching the concept of national security” to suppress Chinese businesses
- This move aligns with broader U.S. efforts to restrict China’s access to advanced technologies, particularly in semiconductors and artificial intelligence
Strategic implications: This expansion of restrictions reflects growing concerns about technology transfer and national security in U.S.-China relations.
- The CMC list serves as a key tool in the U.S. strategy to limit technological cooperation with Chinese firms deemed security risks
- The inclusion of major consumer-facing companies like Tencent signals an expansion of scrutiny beyond traditional military suppliers
- These restrictions could have far-reaching implications for global supply chains and technological development
Global technology landscape: The expanding restrictions on Chinese companies signal a deepening divide in the global technology ecosystem, potentially accelerating the development of parallel technology infrastructures between East and West markets.
Chinese tech giants Tencent, CATL and others protest US listings as army-linked companies