HONG KONG — The U.S. Defense Department recently updated its list of "Chinese Military Companies" (CMC), adding various prominent Chinese firms, including Tencent, SenseTime, and CATL, to the registry citing connections to China's military. This decision has prompted strong protests from these companies, who argue the designation is unfounded. According to the report by AP News, the updated list now includes a total of 134 firms.

Over the past few years, the U.S. has intensified efforts to limit the exchange of advanced technologies, including semiconductors and artificial intelligence (AI), due to concerns that such exchanges could pose threats to national security. The National Defense Authorization Act of 2024 stipulates that beginning in June 2026, the Defense Department is prohibited from engaging with companies listed as Chinese military connections.

In response to the news, Tencent, the world's leading video gaming company and operator of the messaging platform WeChat, saw its Hong Kong-traded shares drop by 7.3%. The company announced plans to "initiate a reconsideration process to correct this mistake" and indicated a willingness to engage in discussions with the Defense Department, as well as pursue legal action if necessary (CBS News).

"We believe that our inclusion in the CMC list is a mistake, as the company is neither a military entity nor contributes to military-civil fusion," Tencent stated, asserting that the inclusion does not undermine its commercial operations.

Similarly, CATL, which is recognized as the world’s largest battery producer, contended that it has not partaken in military-related business and expressed an intent to engage with the Pentagon regarding the designation. CATL's stock also faced a setback, with a decline of 2.84% in Shenzhen. The company's management reiterated their commitment to addressing what they labeled a "false designation."

In a statement, SenseTime argued that it vehemently disagrees with the U.S. Defense Department's decision and emphasized that it is based on "no factual basis." Their corporate communication also noted that the listing is unlikely to affect their global operations significantly.

During a recent briefing, a spokesperson from China's Ministry of Foreign Affairs, Guo Jiakun, urged the U.S. to "immediately correct its wrong practices" and lift what he termed illegal unilateral sanctions against Chinese enterprises. He underscored China's consistent opposition to what they view as unfounded security measures that unfairly target Chinese companies and impede their development.

As these major firms work to contest their placements on the U.S. sanctions list, the unfolding situation raises important questions about international trade dynamics, national security considerations, and the future landscape of global tech interactions.