By James T. Areddy
The Pentagon on Monday added a number of well-known Chinese businesses to a list of companies it identifies as military in nature, including some of the country's largest internet, battery, science and shipping firms.
The additions to the Defense Department's list of "Chinese military companies" reflects its assessment that China fuses commercial and military technology. Beijing aims "to strengthen all [China's] instruments of national power by melding aspects of its economic, military, and social governance," as the Pentagon put it in a threat assessment published last month. The report cited efforts to harness advanced artificial intelligence, quantum computing, biotechnology and integrated circuits for military means.
Among the new names on the list of more than 50 business groups plus subsidiaries are shipping and port industry giants China Overseas Shipping -- or Cosco -- Sinotrans & CSC Holdings, and China International Marine Containers; airplane producer Commercial Aircraft Corp. of China, or Comac; battery behemoth Contemporary Amperex Technology, or CATL; telecommunications modular maker Quectel Wireless Solutions; facial-recognition business SenseTime Group; and WeChat owner Tencent Holdings.
In a sign of investors' attention to the list, Tencent's U.S.-listed shares dropped almost 8% in Monday trading after the Pentagon published it.
A spokesman for Tencent said its inclusion "is clearly a mistake. We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."
The other companies didn't immediately respond to requests for comment.
A basis for the Defense Department's definition is that each has some operations in the U.S. They join groups including telecommunications-equipment maker Huawei Technologies, plane maker Aviation Industry Corp. of China, life-sciences group BGI Genomics and cellular business China Mobile that the Pentagon had previously identified as Chinese military companies.
The practical implications of landing on the list are "more about signaling and reputational damage than immediate legal restrictions," said Craig Singleton, senior director of the China program at the Washington think tank Foundation for Defense of Democracies.
"The designation highlights a company's ties to China's military and alerts U.S. entities to heightened national-security risks, potentially discouraging investment and collaboration while paving the way for future regulatory actions," Singleton said.
A spokesman for the Chinese Embassy in Washington criticized the Pentagon's "concept of national security," including what it termed as discriminatory lists and "unreasonable suppression of Chinese companies." The spokesman called the U.S. practices violations of normal principles of market competition and said China would safeguard the legitimate rights of its companies.
Lawmakers have heaped pressure on the Pentagon to expand the list as they look for ways to slow China's military advances.
"We can expect to see the Trump administration use the growing list as the legal basis for a more determined decoupling strategy, including limiting investments in many of these companies and even potential sanctions," said Eric Sayers, a nonresident fellow at Washington think tank American Enterprise Institute.
Write to James T. Areddy at James.Areddy@wsj.com
(END) Dow Jones Newswires
January 06, 2025 18:45 ET (23:45 GMT)
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