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Photo by Mariia Shalabaieva on Unsplash

The US Department of Defense has made two significant additions to its list of Chinese military companies, affecting some of the world’s most influential tech and automotive players. Tencent, the multinational conglomerate behind popular messaging app WeChat and gaming industry giant Riot Games, as well as CATL, the leading electric vehicle battery maker, have been designated as having ties to China’s military.

The move could have far-reaching implications for both companies’ business operations in the US. While it doesn’t impose sanctions or a ban, the designation makes it more difficult for them to do business with the government and other US-based entities. This development comes as the world’s attention is focused on China-US relations and the impact of economic policies on global trade.

The Background: A Look at the Historical Context

The Trump administration initially introduced an executive order in 2020 that prevented US companies from investing in entities with ties to China’s military. This move was aimed at curbing the country’s influence and impact on sensitive sectors such as technology, finance, and defense. President Biden has continued this policy.

• President Trump’s 2020 executive order targeted entities with ties to China’s military
• The US Department of Defense maintains a list of Chinese companies it considers have connections to the country’s military

Other companies that have faced similar designations include DJI, a drone manufacturer, which was added to the list in 2022 and has since seen its imports blocked by US Customs. The company has filed a lawsuit claiming it’s lost business deals due to the stigma attached to being labeled as a national security threat.

The Impact on Tencent and CATL

Tencent, with its vast portfolio of gaming and tech investments, including Riot Games and Epic Games, has been impacted by the US government’s decision. The company is already facing challenges in the US market due to regulatory scrutiny.

• Tencent owns popular messaging app WeChat
• The company has invested in many gaming companies, including Riot Games and Epic Games

CATL, the world’s largest electric vehicle battery maker, supplies batteries to major automakers like Tesla, Ford, Volkswagen, BMW, and others. Its inclusion on the list has sparked concerns about its ability to continue doing business in the US.

• CATL is the world’s largest electric vehicle battery maker
• It supplies batteries to major automakers like Tesla, Ford, Volkswagen, BMW, and others

The Response from the Companies

Tencent has stated that it is not a military company or supplier, despite its designation. The company’s spokesperson said that unlike sanctions or export controls, this listing does not have an impact on their business and they will work with the Department of Defense to address any misunderstanding.

• Tencent denies being a military company or supplier
• The company claims it will work with the Department of Defense to clear up any misunderstandings

CATL also disputed its inclusion on the list, stating that it was “clearly a mistake.” The company has not yet commented further.

The Future of US-China Relations and Global Trade

The addition of these two companies to the list highlights the complex relationship between the US and China. The move demonstrates the ongoing tension between both nations and their differing economic policies.

As global trade continues to play a crucial role in shaping economies, this development is likely to have significant implications for companies operating in sensitive sectors. It also underscores the importance of transparency and open communication between governments and businesses to avoid misunderstandings that can harm global trade.

Photo by James Lee on Unsplash

The Road Ahead

As both companies continue to navigate this situation, the future of US-China relations and global trade remains uncertain. The ongoing tension between these nations will likely affect businesses operating in sensitive sectors.

Tencent, CATL, and other affected companies must carefully consider their strategies for dealing with the implications of this designation on their business operations in the US.