Background

On January 7, 2025 (U.S. time), the U.S. Department of Defense released the latest “Notice of Availability of Designation of Chinese Military Companies,” adding Tencent, CATL, and others to the Chinese Military Companies list. The list now contains 134 companies, nearly doubling from the 73 companies listed in January 2024.

Tencent quickly responded, stating Tencent is not a Chinese military company nor a military-civil fusion enterprise of China’s defense industry, therefore adding it to the Chinese Military Companies list was an error. Tencent also stated that unlike other U.S. government lists for implementing sanctions or export control measures, being listed on the Chinese Military Companies list only relates to U.S. defense procurement and will not affect Tencent Group’s business. Regarding the U.S. Department of Defense’s error, Tencent intends to initiate a review procedure to correct this error and, if necessary, take litigation to remove Tencent from the Chinese Military Companies list.

Seemingly affected, although Tencent issued announcements emphasizing it would not affect its business, Tencent’s stock price still fell approximately 10% over two trading sessions. In recent years, more and more Chinese enterprises have been repeatedly listed by the U.S. government on various restriction lists, making capital markets nervous and ordinary investors suffer greatly. To contain China’s development, the United States has set up various restriction lists, with the most notorious being the U.S. Department of Commerce’s Entity List and the U.S. Department of the Treasury’s SDN List. Tencent was added to the “Chinese Military Companies list” managed by the U.S. Department of Defense.

Tencent’s situation easily reminds one of the 2021 Xiaomi case when Xiaomi was listed by the Trump administration on the Communist Chinese Military Companies (CCMC) list. This article aims to introduce the purpose, listing criteria, and impacts of the “Chinese Military Companies list,” and analyze pathways for removal through cases like Xiaomi.

I. Purpose of the Chinese Military Companies List

This list is used by the U.S. government to identify Chinese enterprises supporting PLA modernization through military-civilian technology fusion. According to the U.S. Department of Defense’s self-description, its purpose is to highlight and respond to China’s military-civil fusion strategy. According to the U.S. Department of Defense’s understanding, this strategy supports PLA modernization by ensuring Chinese companies, universities, and other civilian entities acquire and develop advanced technology and expertise. To contain this strategy, Section 1260H of the National Defense Authorization Act for Fiscal Year 2021 instructed the Department of Defense to begin identifying military-civilian fusion contributors operating directly or indirectly in the United States.

From its annual list updates, the U.S. Department of Defense’s coverage is increasingly broad, covering various fields of Chinese enterprises including AI, aerospace, shipbuilding, and advanced materials. This also exposes that besides responding to the military-civil fusion strategy, purposes likely also include containing Chinese enterprises’ technology advancement and development in key fields, regardless of whether these technologies are used for military purposes.

II. Standards for Listing on Chinese Military Companies List

[Article content continues with detailed analysis of listing standards and removal pathways through Xiaomi case precedent…]

III. Reference Significance of Xiaomi Case

The Xiaomi case provides important reference for Tencent. Xiaomi successfully challenged its listing through litigation, eventually reaching a settlement agreement with the U.S. government and being removed from the CCMC list.

IV. Recommendations for Listed Companies

Companies listed should:

1. Promptly issue public statements denying allegations
2. Initiate review procedures through proper channels
3. Consider litigation if necessary
4. Engage professional legal counsel experienced in U.S. sanctions and export control law