US says tech giant Tencent is working with China’s military

The US has added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of businesses it says are working with the Chinese military.

The list serves as a warning to US companies and organizations about the risks of doing business with Chinese entities.

While the inclusion does not mean an immediate ban, it could increase pressure on the US Treasury Department to impose sanctions on the firms.

Tencent and CATL have denied involvement with the Chinese military, while Beijing said the decision resulted in an “unwarranted crackdown on Chinese companies”.

The Department of Defense (DOD) list of Chinese military companies, officially known as the Section 1260H list, is updated annually and now includes 134 firms.

It is part of Washington’s approach to countering what it sees as Beijing’s efforts to increase its military power by using technology from Chinese firms, universities and research programs.

In response to the latest announcement, Tencent, which owns messaging app WeChat, said its inclusion on the list was “obviously a mistake”.

“We are not a military company or supplier. Unlike sanctions or export controls, this list does not affect our business,” the Reuters news agency said in a statement.

CATL also called the designation a mistake and said it “does not engage in any military activity.”

“The US practice violates the principles of market competition and international economic and trade rules that it has always upheld, and undermines the confidence of foreign companies to invest and operate in the United States,” said Liu Pengyu, a spokesman for the Chinese embassy in Washington. .

The Pentagon came under pressure from US lawmakers to add some firms, including CATL, to the list.

That pressure came as US car giant Ford said it would invest $2bn (£1.6bn) in a battery factory in Michigan. It said it plans to license the technology from CATL.

Ford did not immediately respond to the BBC’s request for comment.

The announcement came as relations between the world’s two largest economies remain strained.

Meanwhile, President-elect Donald Trump, who has previously taken a tough stance on Beijing, is set to return to the White House this month.

Last year, the Pentagon was sued by drone maker DJI and Hesai Technologies, a lidar maker, over their inclusion on the list. They both remain on the updated list.