HONG KONG – The U.S. Department of Defense has recently expanded its list of companies affiliated with China’s military, adding more than thirty firms, which includes prominent names such as tech giant Tencent, artificial intelligence company SenseTime, and leading battery manufacturer CATL. This move has sparked dissent among the affected companies, who are now looking to contest this classification in an effort to get it revoked.
Over the past few years, the United States has increased its efforts to limit the exchange of advanced technologies—particularly in areas such as semiconductors and artificial intelligence—believing these innovations pose potential risks to national security interests.
The U.S. Defense Department refreshes its “Chinese Military Companies” (CMC) list every year. The most recent update reveals a total of 134 entities on the list. According to the National Defense Authorization Act for 2024, starting from June 2026, the Defense Department will be prohibited from engaging in transactions with these identified companies.
Following the announcement, shares of Tencent, which is based in Hong Kong, experienced a decline of 7.3%. In response, Tencent indicated that it plans to “initiate a reconsideration process to correct this mistake.” The company aims to engage in discussions with the U.S. Defense Department and may resort to legal actions if required to remove itself from the list. Having established itself as the largest video gaming entity globally and operating the popular Chinese messaging service WeChat, Tencent asserted that it is neither a military company nor part of military-civil fusion efforts related to China’s defense industry.
The company clarified in a public announcement to the Hong Kong Stock Exchange that its inclusion on the CMC list is erroneous and does not impact its business operations since the list pertains solely to U.S. defense procurement.
Similarly, CATL responded by asserting its disconnection from any military endeavors. The company stated on its website that it has never participated in military-related activities or businesses, and claimed that this designation would not significantly influence its operations. CATL also expressed intentions to liaise with the Pentagon to disprove its erroneous classification and indicated a willingness to pursue legal recourse if necessary. Consequently, CATL’s stock saw a 2.84% drop in Shenzhen trading.
AI firm SenseTime also spoke out against its inclusion on the list, arguing that there is “no factual basis” for the decision. The company expressed strong disagreement and stated that the designation will not materially impact its global operations. SenseTime reiterated its commitment to working alongside relevant stakeholders to resolve the situation while protecting its and its shareholders’ interests.
In response to the implications of the CMC list, a spokesperson for China’s Ministry of Foreign Affairs, Guo Jiakun, urged the U.S. to rectify its erroneous practices and eliminate the illegal unilateral sanctions and extraterritorial jurisdiction affecting Chinese firms. Guo emphasized China’s firm opposition to the U.S. expanding the definition of national security, creating biased lists under various justifications, and unjustly suppressing Chinese companies, stating that such actions impede China’s high-quality development trajectory.
