Chinese Tech Giant Tencent Takes a Hit After US Defense Department Listing
The stock price of Chinese tech heavyweight Tencent Holdings plummeted 5.4% in Hong Kong after the company was unexpectedly added to a list of “Chinese military companies” by the US Department of Defense. This move comes on the heels of a near 8% decline in Tencent’s US depository receipts on Wall Street.
Other Chinese Companies Affected
Battery maker CATL, a key supplier to automakers like Ford and Tesla, was also added to the list, causing its shares to tumble as much as 5.6%. Although they later recovered slightly, CATL shares were still down 3.5% in Shenzhen.
What This Means for Business
According to the National Defence Authorization Act of 2024, the US Department of Defense will be prohibited from directly procuring goods or services from entities on the list starting in June 2026, and indirectly from June 2027. While this listing does not impose immediate sanctions or export controls, it may have long-term implications for these companies’ business relationships with the US.
Companies Respond to the Listing
Tencent has issued a statement denying any involvement in military activities, calling its inclusion on the list “clearly a mistake.” The company emphasized that this listing will not impact its business operations. CATL has also disputed the designation, stating that it is not engaged in any military-related activities.
US-China Tech Tensions
This move is part of a broader effort by the US to restrict the transfer of high-end technologies to China. In recent years, the US has taken aim at Chinese tech companies, revoking licenses to sell chips to Huawei and unveiling new export controls on critical technologies like quantum computing and semiconductor goods.
The Broader Implications
As the US continues to scrutinize Chinese tech companies, the consequences of these actions will be felt far beyond the companies themselves. The ripple effects will likely impact global supply chains, trade relationships, and the overall tech landscape.
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