The US Department of Defense has added several technology companies to its list of companies working with the Chinese military, including Changxin Memory Technologies, drone maker Autel Robotics, wireless systems developer Quectel Wireless and Tencent, known for its messaging and games. Battery maker CATL, which serves Tesla, Ford and BMW, also made the list. The Pentagon also removed some companies from the register: Beijing Megvii Technology, which deals with AI, and China Telecommunications Corporation no longer meet the criteria for designation.
The federal registry, known as “Section 1260H,” which lists companies linked to the Chinese military industry, now includes 134 companies. The registry must be compiled annually to list companies operating in the USA, in relation to which there is a suspicion that their activities are participating in China’s military-civilian fusion strategy, the purpose of which is to provide the technologies necessary for the modernization and defense of the People’s Republic in cooperation with local companies.
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The updated list does not specify why Tencent became suspicious, in fact, according to the company, it may be a mistake, so it plans to appeal. According to the company’s spokesperson, it does not consider itself either a military company or a supplier, so the list has no significant impact on its business. On the other hand, the fact that the WeChat messaging platform and payment service owned by Tencent is integrated into the communication of Chinese citizens and, according to assumptions, is one of the favorite channels of the government can already provide enough basis for the Americans. Canada chose a more drastic path, outright banning the app from government devices.
Being included in the list does not bring with it such serious consequences as commercial blacklists or “entity lists”, as they do not mean any specific immediate prohibition or restriction. However, it can indirectly affect companies negatively, as it serves as a kind of warning to American organizations and companies about the risks of doing business with these companies. The US Treasury Department is also more likely to impose sanctions on the companies involved. If some organizations decide to abandon companies included in the 1260 list, it can also cause problems in the supply chain.
Registration may be inconvenient for CATL in that it may complicate its relationship with Tesla. And the listing of Tencent could cause a headache for Microsoft, as the Chinese are developing the mobile version of Call of Duty, which became its property with the acquisition of Activision Blizzard. After this, it cannot be ruled out that the US will act more strongly against WeChat, similar to the campaign launched against TikTok, as it may prove to be an easier target due to its smaller American user base.
Source: www.hwsw.hu
