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Tencent Branded a Chinese Military Company by US Government

Authore: DanielUpdate:Feb 01,2025

Tencent Branded a Chinese Military Company by US Government

Summary

  • Tencent's inclusion on a Pentagon list of companies with ties to the Chinese military caused a stock price decline.
  • The listing stems from a 2020 executive order restricting US investment in Chinese military entities.
  • Tencent denies being a military company and plans to collaborate with the Department of Defense (DOD) to clarify the situation.

Tencent Holdings Limited, a Chinese technology giant, has been added to the US Department of Defense's (DOD) list of companies linked to China's People's Liberation Army (PLA). This designation follows a 2020 executive order by former President Trump prohibiting US investment in Chinese military companies and their affiliates, mandating divestment from existing holdings. The DOD list identifies companies believed to contribute to PLA modernization through technology, expertise, or research. While initially comprising 31 companies, the list has expanded, leading to the delisting of some companies from the New York Stock Exchange.

The January 7th release of the updated list included Tencent, prompting a swift response. A Tencent spokesperson issued a statement to Bloomberg, asserting:

Tencent's Response to DOD Listing

"We are not a military company or supplier. Unlike sanctions or controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."

Previous years have seen companies removed from the list after demonstrating they no longer meet the criteria. Bloomberg notes at least two companies successfully removed their names through collaboration with the DOD, suggesting a similar strategy for Tencent.

The publication of the list triggered a significant drop in share prices for several listed companies. Tencent experienced a 6% decline on January 6th, with further downward trends attributed to the DOD listing. Given Tencent's global prominence – the world's largest video game company by investment and a major global player – its inclusion carries substantial financial implications for US investment.

Tencent's vast gaming empire, Tencent Games, dwarfs competitors like Sony with a market capitalization several times larger. Tencent Holdings also holds significant stakes in numerous successful game studios, including Epic Games, Riot Games, Techland (Dying Light), Dontnod Entertainment (Life is Strange), Remedy Entertainment, and FromSoftware. Furthermore, Tencent Games has invested in numerous other prominent developers and related companies such as Discord.