US blacklists Tencent, China's most-valuable internet company: Here's why
What's the story
The Pentagon has flagged Tencent, a top Chinese social media and gaming giant, as a 'Chinese military company.' The move comes as a new chapter in the US-China tensions.
The ban list now features 134 companies, including recently added battery maker CATL, drone maker Autel Robotics, and shipping giant COSCO.
The Pentagon's list is an annual update of companies suspected to be tied with the Chinese military while also doing business.
Impact assessment
Implications of the Pentagon's designation
The Pentagon's designation is a big deal for US companies working with those on its list as they could lose future Pentagon contracts.
The move highlights the growing rift between the US and China, driven by economic, technological, and military rivalry.
Tencent's US-listed shares fell nearly 10% after the announcement.
Other Chinese firms like CATL that licenses battery tech to Ford Motor for a $3.5 billion EV factory in Michigan were also impacted by their inclusion on this list.
Company response
Tencent refutes Pentagon's designation
In response to the Pentagon's designation, Tencent has said that it is "not a military company or supplier" and that the classification will have "no impact on our business."
The company also said that it would "work with the Department of Defense to address any misunderstanding."
Despite being blacklisted by the US over alleged Chinese military ties, Tencent is determined to clarify its position and continue business.
Wider impact
Broader implications of the blacklist
The blacklisting of Tencent and CATL could further fuel tensions between the US and China, the world's two largest economies.
Although no specific sanctions are linked to the Pentagon's blacklist, it does dissuade US firms from doing business with its members.
CATL's inclusion, a supplier to many global automakers such as Tesla, Stellantis NV, and Volkswagen AG, could upend their supply chain amid fears of China's growing dominance in key industrial sectors.
Reconsideration process
Pentagon's list and reconsideration requests
The Chinese military company list was created under an order signed by former President Donald Trump in late 2020, banning American investment in Chinese companies owned or controlled by the military.
It was part of a wider effort to rein in what the US called Beijing's abusive business practices.
The Defense Department has said companies on the list can seek reconsideration and recently delisted several firms.