US designates Tencent a Chinese military company

The US has added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of businesses it says work with China's military.

The list serves as a warning to American companies and organisations about the risks of doing business with Chinese entities.

While inclusion does not mean an immediate ban, it can add pressure on the US Treasury Department to sanction the firms.

Tencent and CATL have denied involvement with the Chinese military, while Beijing said the decision amounted to "unreasonable suppression of Chinese companies".

The Department of Defense's (DOD) list of Chinese military companies, which is formally known as the Section 1260H list, is updated annually and now includes 134 firms.

It is part of Washington's approach to counteracting what it sees as Beijing's efforts to increase its military power by using technology from Chinese firms, universities and research programmes.

In response to the latest announcement Tencent, which owns the 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 spokesperson for the company told the BBC.

CATL also called the designation a mistake and said it "is not engaged in any military related activities."

"The US's practices violate the market competition principles and international economic and trade rules that it has always advocated, and undermine the confidence of foreign companies in investing and operating in the United States," said Liu Pengyu, a spokesperson 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 making giant Ford said it would invest $2bn (£1.6bn) to build a battery plant in Michigan. 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 biggest economies remain strained.

Meanwhile, President-elect Donald Trump, who has previously taken a tough stance against Beijing, is due to return to the White House this month.

The Pentagon was sued last last year by drone maker DJI and Lidar-maker Hesai Technologies over their inclusion on the list. They both remain on the updated list.

Tencent shares were trading around 7% lower in Hong Kong on Tuesday. CATL was down by about 4%.