In early 2025, the US Department of Defense updated its “Section 1260 list,” adding Chinese tech giant Tencent to the list of companies considered to be part of China’s military-civil fusion strategy. This strategy involves collaboration between Chinese companies and the People’s Liberation Army (PLA) to enhance technological advancements for military modernization. Although being included on this list does not automatically lead to a ban, it can create significant challenges for companies, including restrictions on collaborations with the US government and potential reluctance from other companies to work with them.
Tencent’s inclusion on the list has sparked controversy, with the company arguing that it was mistakenly added and intending to appeal the decision. The US has not provided specific reasons for the inclusion, but Tencent’s vast reach through its messaging platform, WeChat, and other services makes it a potential tool for the Chinese government to access sensitive data. WeChat’s integration into daily life in China and its widespread use internationally, combined with its messaging capabilities, have raised concerns about its role in intelligence gathering and influence campaigns, leading to bans in countries like Canada and Australia for government use.
The updated list also includes CATL, a Chinese battery manufacturer that supplies major companies like Tesla, Ford, and BMW. The inclusion of these companies may have significant implications for US-based corporations, particularly in the tech and automotive industries, as they may face challenges in maintaining business relationships with these companies due to security concerns. Companies working with Tencent, such as Microsoft, may also face scrutiny, particularly given Tencent’s stake in popular games like PUBG and Fortnite.
While inclusion on the Section 1260 list does not come with the same severe restrictions as the Entity List, it still poses serious consequences. Companies listed on the Section 1260 list can face difficulty in securing government contracts, and some organizations may choose to sever ties with these companies to avoid potential risks to their own operations. This situation could lead to significant disruptions in global supply chains and increase tensions between the US and China over technology and security concerns.
