The U.S. Department of Defense has designated CATL and Tencent as “Chinese military companies,” escalating trade and political tensions. The designation harms reputations, deters partnerships

The U.S. Defense Department has added major Chinese technology companies including gaming and technology company Tencent, artificial intelligence firm SenseTime and the world’s biggest battery maker CATL to its list of companies it says have ties to China’s military.

Hong Kong-listed shares of Tencent, the parent of Chinese instant messaging app WeChat, fell 7.3% on Tuesday, losing about HK$275 billion ($35.4 billion) in market value. Shenzhen-listed shares of CATL closed 2.8% lower, shaving off 32.2 billion yuan ($4.4 billion) in market value.

The U.S. Defense Department has updated its list of Chinese companies allegedly linked to the People's Liberation Army (PLA). The most notable new names on the list are memory maker Changxin Memory Technologies (CXMT), battery maker CATL, and cloud and gaming giant Tencent, reports Nikkei.

Tencent Holdings and Contemporary Amperex Technology Co. Ltd. (CATL) have faced significant stock declines following their recent designation as “Chinese military companies” by the U.S. Department of Defense (DoD).

The Pentagon recently added Tesla’s battery suppliers, Contemporary Amperex Technology, and Tencent to its list of companies with ties to the Chinese military. While the designation has minimal direct business impact,

The Pentagon has added five Chinese companies including Shenzhen-based tech giant Tencent and the world's biggest battery maker CATL to a list of mainland firms that Washington believes pose threats to US national security.