The U.S. Defense Department has added dozens of Chinese companies, including games and technology company Tencent, artificial intelligence firm SenseTime and the world's biggest battery maker CATL, to a list of companies it says have ties to China's military.

In recent years, Washington has sought to restrict sharing of advanced technology, including semiconductors and AI, deeming it to be a threat to national security.

The U.S. Defense Department updates its list of "Chinese Military Companies," or CMC list, annually. With the latest revision, it includes 134 companies. The National Defense Authorization Act of 2024 bans the Defense Department from dealing with the designated companies beginning in June 2026.

Tencent's Hong Kong-traded shares fell 7.3% on Tuesday and the company said it would "initiate a reconsideration process to correct this mistake," seek talks with the U.S. Defense Department and if need be take legal measures to get it removed from the list. Tencent is the world's largest video gaming company and operates Chinese messaging platform WeChat.

Companies will seek to have decision reversed
"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," Tencent said in an announcement to the Hong Kong Stock Exchange.

"Unlike other lists maintained by the U.S. Government for sanctions or export control measures, inclusion in the CMC List relates only to U.S. defense procurement, which does not affect the business of the Group," it said.

Battery maker CATL said in a statement posted on its website that the company "has never engaged in any military-related business or activities," and said that the designation wouldn't have adverse impact on its operations.

Like Tencent, CATL maintains that its inclusion to the list was a "mistake" and that it would proactively engage with the Pentagon to "address the false designation" and take legal action if necessary to protect company and stakeholder interest. CATL's stock fell 2.84% in Shenzhen.

AI company SenseTime said in a statement that the decision to include it on the list had "no factual basis."

"We firmly disagree with it," SenseTime's statement said, adding that the decision has "no material impact on our global operations."

"SenseTime remains firmly committed to working collaboratively with the relevant stakeholders to address this matter, and to safeguarding the interests of the company and our shareholders," the company said.

During a daily news briefing, Chinese Ministry of Foreign Affairs spokesperson Guo Jiakun urged the U.S. to "immediately correct its wrong practices, and lift the illegal unilateral sanctions and long-arm jurisdiction on Chinese companies."

"China consistently and firmly opposes the U.S. overstretching the concept of national security, creating discriminatory lists under various pretexts, and unwarrantedly suppressing Chinese companies, hindering China's high-quality development," Guo said.

Source