On January 6th, the U.S. Department of Defense released an updated list of companies linked to China's military activities. This list, formally known as the "Chinese Military Company" (CMC) list, includes 134 Chinese firms, such as Tencent Holdings, Contemporary Amperex Technology Co. Ltd. (CATL), Changxin Memory Technologies, Quectel Wireless Solutions, and drone manufacturer Autel Robotics. The list also highlights key players in the semiconductor industry like Yangtze Memory Technologies (YMTC) and SMIC.

Under the U.S. National Defense Authorization Act (NDAA) for fiscal year 2024, companies listed as part of the CMC may face significant restrictions. These include limitations on the U.S. Department of Defense's ability to contract with listed firms, either directly or for services and technologies related to military products. Specifically:

● The Department of Defense will be prohibited from entering into or extending contracts with companies on the CMC list by June 30, 2026.

● A ban on contracting with products, services, or technologies developed by listed firms will take effect by June 30, 2027.

● Other entities that engage in trade with the Department of Defense may face restrictions on cooperation with CMC-listed companies.

In response, Tencent argued that its inclusion on the list was a mistake, stating that it is not a defense contractor or military supplier. "Unlike export controls, this designation does not affect our business operations, but we will work with relevant U.S. authorities to resolve any misunderstandings," the company said in a statement.

CATL also dismissed the designation, stating that the company has no involvement in military-related activities. Similarly, a spokesperson from Quectel remarked that the company has no cooperation with any military force and would ask the Pentagon to reconsider its decision.

In a separate development, the U.S. Department of Defense has removed six Chinese companies from the CMC list:

● Beijing Megvii Technology Co., Ltd. (Megvii)

● China Marine Information Electronics Company Limited (China Marine Info Elec)

● China Railway Construction Corporation Limited (CRCC)

● China State Construction Group Co.

● China Telecommunications Corporation

● Shenzhen Consys Science & Technology Co., Ltd. (Consys)

Complete CMC List:

● Qihoo 360

● Aerospace CH UAV Co., Ltd.

● Autel Robotics Co., Ltd.

● Aviation Industry Corporation of China Ltd. (AVIC) and its subsidiaries

● Baicells Technologies Co., Ltd.

● Beijing Zhidao Chuangyu Information Technology Co., Ltd. (Knownsec)

● BGI Group and its subsidiaries

● ChangXin Memory Technologies, Inc. (CXMT)

● Chengdu JOUAV Automation Tech Co., Ltd. (JOUAV)

● Chengdu M&S Electronics Technology Co., Ltd. (M&S Electronics)

● China Aerospace Science and Industry Corporation Limited (CASIC) and its subsidiaries

● China Communications Construction Group (CCCG) and its subsidiaries

● China Construction Technology Co., Ltd. (CCTC)

● China COSCO SHIPPING Corporation Limited (COSCO SHIPPING) and its subsidiaries

● China Electronics Corporation (CEC) and its subsidiaries

● China Electronics Technology Group Corporation (CETC) and its subsidiaries

● China General Nuclear Power Corporation (CGN)

● China International Marine Containers (CIMC)

● China Mobile Communications Group Co., Ltd. (China Mobile Comm)

● China Mobile Limited (China Mobile)

● China National Chemical Corporation Ltd. (ChemChina)

● China National Nuclear Corporation (CNNC)

● China National Offshore Oil Corporation (CNOOC) and its subsidiaries

● China North Industries Group Corporation Limited (Norinco Group) and its subsidiaries

● China State Construction Engineering Corporation Limited (CSCEC) and its subsidiaries

● China State Shipbuilding Corporation Limited (CSSC) and its subsidiaries

● CloudWalk Technology Co., Ltd. (CloudWalk)

● Commercial Aircraft Corporation of China Limited (COMAC) and its subsidiaries

● Contemporary Amperex Technology Co., Ltd. (CATL)

● CRRC Corporation Limited (CRRC)

● DJI and its subsidiaries

● SenseTime Group, Inc.

● Tencent Holdings Limited

● Yangtze Memory Technologies Co., Ltd. (YMTC)

● Zhejiang Dahua Technology Co., Ltd. (Dahua) and its subsidiaries

The inclusion of these firms is part of the U.S.'s broader strategy to curb China's technological advancement in sectors perceived as critical to its military development. As a result, many of these companies are likely to face challenges in their dealings with American firms and government agencies.