The Pentagon has added Tencent Holdings Ltd. and CATL to its Federal Register list of entities linked to the Chinese military. This decision has sparked significant backlash from both companies, who deny they are connected to the People’s Liberation Army (PLA).
Tencent is the single largest video games company in the world, with stakes in U.S. firms, including Epic Games, responsible for Fortnite and the Unreal Engine, and Activision Blizzard, responsible for the likes of Call of Duty and World of Warcraft. Its shares fell over seven percent on news it had been designated a Chinese military company. CATL, a leading supplier of batteries to global automotive giants, including Elon Musk’s Tesla, saw its stock drop by around three percent.
Their inclusion on the Pentagon blacklist does not impose immediate sanctions but is a signal that U.S. businesses should be cautious in dealing with them. Both companies have vehemently denied any ties to the PLA. “We are not a military company or supplier,” a Tencent spokesman declared. Similarly, CATL labeled the decision “a mistake.”
Domestically, Tencent is the creator of WeChat, an app that integrates messaging, payment, and social networking services. During President-elect Donald J. Trump’s first administration, WeChat faced potential bans in the U.S. over national security concerns, highlighting the ongoing scrutiny of Chinese tech firms.
TikTok, a social platform popular with American youth, has been a particular focus in recent months, with U.S. legislation requiring Chinese parent company to divest from it to avoid a ban subject to an ongoing Supreme Court case. President-elect Trump, who found success on TikTok during the presidential election campaign, has told the court he can resolve the outstanding issues with the app politically, eliminating the need for an outright ban.