Summary
Tencent has been designated a Chinese military company by the United States government along with Contemporary Amperex Technology (CATL), an electric vehicle battery maker (nice spot,IGN).
The aforementioned pair of companies have been added to a federal register that implicates private businesses with ties to the People’s Liberation Army (PLA), the military wing of the Chinese Communist Party (CCP). There aren’t necessarily any sanctions that will arise from this designation, but it does discourage U.S.-based companies from engaging in business relations with these companies. This has caused some panic among Tencent investors. The company’s stock price in Hong Kong dropped 7 per cent following the U.S. government’s announcement.
“No Impact on Business”
A spokesperson for Tencent toldBloomberg, “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.” CATL has also told the press that its inclusion is a “mistake.”
According to the Pentagon, these companies further Chinese military interests through Military Civil Fusion. This is essentially a blending of private and military interests, with the ultimate goal of furthering the interests of the PLA. In the past, Chinese companies like Xiaomi have had their names removed from the list after negotiations with the Department of Defense.
These new inclusions come amidst increasing economic tensions between the world’s two superpowers. With President-elect Donald Trump just weeks away from taking up his position in The White House, there’s a feeling that the ongoing trade war between the United States and China is going to worsen even further. On the campaign trail, Trump proposed a 60 per cent tariff on goods entering the United States from China (thanks,PBS).
Tencent is a major investor in the gaming industry. The corporation wholly owns Riot Games, developer of League of Legends and creator of Arcane. Tencent is also a partial owner of Larian Studios (30%) and Krafton, among many other publishers and developers.
