The Pentagon on Monday labeled Tencent, the Chinese social media and gaming giant, as a Chinese military business operating in the United States, the latest action in an escalating series of retaliatory moves between the world’s two superpowers.
Tencent’s shares in the United States plunged by nearly 10 percent following the decision by the Defense Department, which also targeted Chinese battery, drone and shipping companies.
The Defense Department updates annually a list of what it designates as “Chinese military companies,” entities it has identified as having both military and commercial technology. There are now 134 companies on the list, which was posted to the Federal Register. It also added Contemporary Amperex Technology Co., known as CATL, as well as units of China Overseas Shipping, known as COSCO, the chipmaker Changxin Memory Technologies and the drone maker Autel Robotics. China Overseas Shipping is one of the world’s largest shipping lines.
Putting Tencent on the list was “clearly a mistake,” a spokeswoman for the company said in an emailed statement. “We are not a military company or supplier.”
Tencent also said that the listing would have “no impact on our business,” and that it would “work with the Department of Defense to address any misunderstanding.”
The designation is a warning to businesses in the United States that working with companies on the list could get them barred from future Pentagon contracts.
To be added to the list, a company must have some business operations within the United States. For example, CATL is licensing its battery technology to the American carmaker Ford Motor, which is building a $3.5 billion electric vehicle factory in Michigan.
Shares of Tencent, which is listed in Hong Kong, and CATL, which trades in Shenzhen, China, slumped in Asia trading.
CATL did not immediately respond to a request for comment.
As tensions between the U.S. and China have escalated in recent years, pressure has been growing from lawmakers to find ways to thwart China’s advances technologically and militarily.
In 2021, the Chinese consumer electronics company Xiaomi successfully sued the Pentagon to be removed from the blacklist after arguing in federal court that it had no ties to the Chinese military.
More recently, the countries have engaged in an escalating economic tit-for-tat. It began during the first term of President-elect Donald J. Trump, after he took aim at China with tariffs and restrictions on trade. At that time, Beijing took mostly symbolic and measured responses in retaliation.
Since then, the Biden administration has expanded its restrictions on Chinese companies and imposed bans on dual-use products, recently targeting 140 Chinese companies. On Thursday, the administration said it was considering a new rule that could restrict or ban Chinese drones in the United States.
Beijing has adopted an increasingly aggressive stance as it prepares for a second presidential term with Mr. Trump, an outspoken critic of China and its economic might.
Chinese regulators have announced an investigation into the American computer chip company Nvidia, banned the export of rare minerals to the United States and have taken more targeted swipes at individual companies to expose their supply chain vulnerabilities.
