The US has added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of companies it says work with China’s 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 add pressure on the US Treasury Department to sanction the companies.
Tencent and CATL have denied involvement in the Chinese military, while Beijing said the decision was “unreasonable repression of Chinese companies”.
The Department of Defense (DOD) list of Chinese military companies, formally known as the Section 1260H list, is updated annually and now includes 134 companies.
It is part of Washington’s approach to counter 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 “clearly a mistake”.
“We are not a military company or supplier. Unlike sanctions or export controls, this listing has no impact on our business,” a company spokesman told the BBC.
CATL also called the designation a mistake, saying it is “not involved in any military-related activities.”
“The United States’ practice violates the principles of market competition and international economic and trade rules that it has always advocated, 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 had come under pressure from US lawmakers to add some of the firms, including CATL, to the list.
This pressure came as US car manufacturing giant Ford said it would invest $2bn. It has said it plans to license technology from CATL.
Ford did not immediately respond to a BBC request for comment.
The announcement comes as relations between the world’s two largest economies remain strained.
Meanwhile, President-elect Donald Trump, who has previously taken a hard line against Beijing, is due to return to the White House this month.
Last year, the Pentagon was sued by drone manufacturer DJI and Lidar manufacturer Hesai Technologies over their inclusion on the list. They both remain on the updated list.
Tencent shares were trading about 7% lower in Hong Kong on Tuesday. CATL fell by about 4%.