Tencent and CATL prepare legal actions against the Pentagon’s military designation, experiencing significant stock declines. Both companies deny military ties and assert their civilian operations will remain unaffected amidst ongoing U.S.-China trade tensions.
Two prominent Chinese technology companies, Tencent Holdings Ltd. and Contemporary Amperex Technology Co. Limited (CATL), are initiating legal actions following their designation by the U.S. Department of Defense as Chinese Military Companies. This designation causes significant implications in U.S. defense procurement, thereby negatively affecting market shares. Specifically, Tencent experienced a 7.8% decline in Hong Kong, and CATL’s stock dropped by 6% in Shenzhen, both companies strongly denying affiliations with military activities.
The recent decision by the Pentagon comes amid heightened U.S.-China trade tensions. In response to escalating situations, China implemented new restrictions on 28 U.S. companies, limiting operations for major defense contractors such as Lockheed Martin and Boeing in China. This geopolitical environment poses challenges for companies involved in technology and defense, prompting Tencent and CATL to confirm their civilian status and the absence of military involvements.
In summary, Tencent and CATL are refuting the Pentagon’s military classification while preparing legal challenges to dispute the designation. Both firms assert that their business operations will remain unaffected and are committed to ensuring compliance with U.S. regulations. The ongoing trade tensions mark a significant development that may continue to impact global market dynamics, prompting continual scrutiny from the international community.
Original Source: www.benzinga.com
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