Tencent's Stock Plummets After Being Listed on US 'Chinese Military Support' List

US Department of Defense Adds Tencent and CATL to List of Chinese Military Companies

The U.S. Department of Defense has determined that Tencent (gaming) and CATL (battery), two of the top companies in China’s industry, are supporting the Chinese military.

On the 6th (local time), the U.S. Department of Defense announced that it had added Tencent, CATL, memory semiconductor company CXMT (Changxin Memory), drone manufacturer Autel Robotics, and internet connectivity module manufacturer Quectel to the updated list of Chinese military companies. Six companies, including AI-based logistics automation company Megvii and telecommunications company China Telecom (CTC), were removed from the list, which now includes a total of 134 companies.

The U.S. government has been compiling the list of Chinese military companies since 2020 during the first Trump administration. This is a countermeasure against the Chinese government’s civil-military fusion policy, which utilizes advanced technology and resources from private companies to support the modernization of the Chinese military.

Major foreign media outlets such as Bloomberg highlighted the simultaneous designation of two key Chinese companies as Chinese military companies. Tencent is the company that owns WeChat, the most widely used messenger application in China, as well as a stake in Riot Games, the developer of League of Legends. CATL ranked first in the global electric vehicle battery market in the first quarter of last year and supplies electric vehicle batteries to automakers such as Tesla and BMW.

Tencent and CATL protested the Department of Defense’s designation of them as Chinese military companies, calling it a “clear mistake.” Tencent stated in a press release, “Our company is not a military company,” and added, “We will cooperate with the (U.S.) Department of Defense to resolve misunderstandings.” CATL emphasized, “We are not involved in military-related activities and will request the Department of Defense to reconsider the designation.”

The American Depositary Receipts (ADR) of Tencent, listed on the New York Stock Exchange, plunged 7.82% that day, marking the largest single-day drop in three months.

Being designated as a Chinese military company does not immediately result in sanctions or export controls, but it can significantly damage a company’s reputation. Additionally, U.S. companies that do business with these companies may face pressure from the Treasury Department to impose sanctions. The 2024 National Defense Authorization Act (NDAA) prohibits the Department of Defense from doing business with designated Chinese companies starting June 30, 2026.

Meanwhile, DJI, the world’s largest drone manufacturer designated as a Chinese military company last year, was included on the list again this time. Earlier, on the 2nd, the U.S. Department of Commerce’s Bureau of Industry and Security announced plans to regulate Chinese drone parts, including those from DJI, which dominates the U.S. drone market, citing potential national security threats.