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Tencent’s US-listed shares fell as a lot as 9.8 per cent 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 a listing of dozens of corporations the defence division considers to be working with the Chinese language army straight or not directly, in keeping with a federal doc printed on Monday.
The listing is a part of Washington’s broad efforts to counteract the rise of China as a army superpower.
The Pentagon has described the listing as a option to spotlight and counter what it calls China’s “military-civil fusion technique”, which bolsters the Chinese language army’s modernisation efforts by making certain it might probably purchase superior know-how from Chinese language corporations, universities and analysis programmes which might be masked as civilian entities.
The US has imposed a number of rounds of sweeping export controls designed to curtail China’s potential to make a complicated semiconductor business and make it harder 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 certain minerals and metals utilized in semiconductor manufacturing and army {hardware}.
Being added to the Pentagon’s Chinese language army corporations blacklist has no direct authorized ramifications and doesn’t end in sanctions. Nevertheless, it does carry reputational dangers.
Tencent’s addition to the listing “is clearly a mistake”, an organization spokesperson mentioned.
“We aren’t a army firm or provider. Not like sanctions or export controls, this itemizing has no impression on our enterprise. We are going to nonetheless work with the Division of Protection to handle any misunderstanding,” the spokesperson added.
Tencent’s US-traded American depositary receipts had been down about 8 per cent on Monday, after falling as a lot as 9.8 per cent earlier following the information.
CATL, the world’s largest battery maker, was additionally added to the Pentagon’s listing. The producer, which is a vital provider to electric-vehicle maker Tesla, has a worldwide EV battery market share of about 38 per cent.
CATL has been working with Tesla and Ford to license its battery manufacturing know-how for factories within the US.
CATL additionally referred to as its inclusion on the listing “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 had been additionally added to the listing.
Starting subsequent yr, corporations on the listing will be unable to do enterprise with the Pentagon, doubtlessly affecting these which might be within the defence provide chain.
The Pentagon will be unable to contract corporations on the listing starting in June 2026, and from 2027 will be unable to acquire items or companies that embrace the listed corporations of their provide chains.
