US Accuses Tencent of Military Ties

Pentagon List Includes Tencent, Impacting Stock Value

Tencent, a Chinese tech giant, has been added to the Pentagon's list of companies with ties to the Chinese military (PLA). This listing stems from a 2020 executive order by President Trump restricting US investment in Chinese military entities. The order mandates divestment from these companies, believed to contribute to PLA modernization through technology and expertise.

The Department of Defense (DOD) regularly updates this list, which initially contained 31 companies and has since expanded. The inclusion of Tencent on the latest January 7th update prompted an immediate response.

Tencent's Response

Tencent issued a statement to Bloomberg, asserting it is neither a military company nor supplier. While claiming the listing doesn't directly affect its operations, Tencent pledged to collaborate with the DOD to clarify any misconceptions.

This year, some companies previously listed were removed after no longer meeting the designation criteria. Precedents exist where companies successfully petitioned the DOD for removal, suggesting Tencent may pursue a similar course.

Market Reaction and Implications

The DOD's announcement triggered a stock market decline for several listed companies. Tencent's shares experienced a 6% drop on January 6th, with analysts linking this to its inclusion on the list. Given Tencent's global prominence—it's the world's largest video game company by investment and a major player overall—its listing and potential removal as a US investment option carry significant financial weight.

Tencent's vast gaming portfolio, managed through Tencent Games, includes stakes in renowned studios such as Epic Games, Riot Games, Techland, Don't Nod, Remedy Entertainment, and FromSoftware. Its investments extend to numerous other developers and companies like Discord. This broad reach underscores the potential impact of its presence on the Pentagon's list.