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Tencent’s Hong Kong-listed shares fell 5 per cent on Tuesday after the Pentagon designated the tech large as a Chinese language army firm working within the US.
The gaming and social media group, which owns ubiquitous Chinese language messaging app WeChat, was added to an inventory of dozens of firms the defence division considers to be working with the Chinese language army instantly or not directly, in accordance with a federal doc printed on Monday. Tencent’s US-listed shares closed down 7.8 per cent following the information.
The checklist is a part of Washington’s broad efforts to counteract the rise of China as a army superpower.
CATL, the world’s greatest battery maker, was additionally added to the Pentagon’s checklist. The producer, which is a crucial provider to electric-vehicle maker Tesla, has a worldwide EV battery market share of about 38 per cent. Its shares in mainland China opened down 3 per cent on Tuesday.
The Pentagon has described the checklist as a approach to spotlight and counter what it calls China’s “military-civil fusion technique”, which bolsters the Chinese language army’s modernisation efforts by guaranteeing it might purchase superior know-how from Chinese language firms, universities and analysis programmes which can be masked as civilian entities.
The US has imposed a number of rounds of sweeping export controls designed to curtail China’s capability to make a sophisticated semiconductor business and make it tougher for Beijing to develop synthetic intelligence for army use.
In retaliation, Beijing has been tightening its personal export controls. Final month it banned shipments to the US of sure minerals and metals utilized in semiconductor manufacturing and army {hardware}.
Being added to the Pentagon’s Chinese language army firms blacklist has no direct authorized ramifications and doesn’t lead to sanctions. Nevertheless, it does carry reputational dangers.
Tencent’s addition to the checklist “is clearly a mistake”, an organization spokesperson mentioned.
“We aren’t a army firm or provider. In contrast to sanctions or export controls, this itemizing has no affect on our enterprise. We are going to nonetheless work with the Division of Protection to handle any misunderstanding,” the spokesperson added.
CATL, which has been working with Tesla and Ford to license its battery manufacturing know-how for factories within the US, additionally referred to as its inclusion on the checklist “a mistake”.
“CATL isn’t engaged in any army associated actions”, the corporate mentioned. “We welcome accountable discourse on our enterprise operations and take questions on our enterprise significantly.”
Chip producer Changxin Reminiscence Applied sciences, drone-maker Autel Robotics and IT gear maker Quectel Wi-fi have been additionally added to the checklist.
Starting subsequent 12 months, firms on the checklist won’t be able to do enterprise with the Pentagon, probably affecting these which can be within the defence provide chain.
The Pentagon won’t be able to contract firms on the checklist starting in June 2026, and from 2027 won’t be able to obtain items or providers that embody the listed firms of their provide chains.
