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Tencent’s US-listed shares fell as a lot as 9.8% after the Pentagon designated the tech large as a Chinese navy firm working within the United States.
The gaming and social media group, which owns the ever present Chinese messaging app WeChat, has been added to an inventory of dozens of corporations the Defense Department believes are working with the Chinese navy straight or not directly, in line with a printed federal doc Monday.
The listing is a part of Washington’s broader efforts to counter China’s rise as a navy superpower.
The Pentagon has described the listing as a method to spotlight and counter what it calls China’s “military-civilian fusion technique,” which strengthens the Chinese navy’s modernization efforts by guaranteeing it could possibly purchase superior expertise from Chinese corporations, universities and disguised search packages. as civil entities.
The United States has imposed a number of rounds of broad export controls designed to restrict China’s skill to construct a sophisticated semiconductor business and make it harder for Beijing to develop synthetic intelligence for navy use.
In retaliation, Beijing tightened its export controls. Last month it banned shipments to the United States of some minerals and metals used within the manufacturing of semiconductors and navy {hardware}.
The Pentagon’s blacklisting of Chinese navy corporations has no direct authorized penalties and doesn’t entail sanctions. However, it carries reputational dangers.
Tencent’s addition to the listing “is clearly a mistake,” an organization spokesperson stated.
“We will not be an organization or a navy provider. Unlike sanctions or export controls, this listing has no impression on our enterprise. We will nonetheless work with the Department of Defense to resolve any misunderstandings,” the spokesperson added.
Tencent’s U.S.-traded American depositary receipts fell about 8% on Monday, after falling as a lot as 9.8% following the information.
CATL, the world’s largest battery maker, was additionally added to the Pentagon’s listing. The producer, which is a serious provider to electrical automobile maker Tesla, has a worldwide electrical automobile battery market share of round 38%.
CATL has partnered with Tesla and Ford to license its battery manufacturing expertise to factories within the United States.
CATL additionally referred to as its inclusion on the listing “an error.”
“CATL is just not engaged in any navy exercise,” the corporate stated. “We welcome accountable discourse about our enterprise operations and take questions on our enterprise critically.”
Chip maker Changxin Memory Technologies, drone maker Autel Robotics and IT gear maker Quectel Wireless had been additionally added to the listing.
Starting subsequent yr, corporations on the listing will be unable to do enterprise with the Pentagon, with doable penalties for these within the protection provide chain.
The Pentagon will not have the ability to contract with corporations on the listing beginning in June 2026, and from 2027 it should not have the ability to procure items or companies that embrace the listed corporations of their provide chain.
