The U.S. Department of Defense has added Chinese internet giant Tencent to its list of “Chinese military companies.” This classification could have significant ramifications for the firm’s investment activities in the U.S.
Tencent is best known for its super app WeChat. It is also a major investor in several U.S. tech companies and startups, including Reddit, Snap, and Epic Games, the creator of Fortnite. The listing currently has no legal consequences beyond barring U.S. government contractors from doing business with Tencent starting in 2026.
The notice did not specify the reasons behind the belief that Tencent is aiding the Chinese military. Tencent has vehemently denied the allegations, calling the listing a “mistake.” The company asserts that it is not a military company or supplier. The Defense Department did not respond to requests for comment.
Through an investment arm called the Tencent Exploration Team, based in Palo Alto, the company has remained highly active in the venture capital world.
Tencent added to military blacklist
Its portfolio includes significant stakes in companies like insurer Oscar Health and Reddit.
Investing in global tech companies, particularly in sectors like health and video games, has long been a strategic focus for Tencent. If the company cannot get itself removed from this list, its U.S. investment activities might be adversely affected. Founders and companies could become wary of accepting funds from a firm officially designated as linked to the Chinese military, even without public evidence to substantiate such claims.
Further compounding the issue is the potential for increased pressure leading to further sanctions against Tencent by other U.S. government entities, such as the Treasury Department. Regardless of additional measures, the listing underscores a significant trend of U.S.-China economic decoupling. The once-common practice of Chinese VCs investing in U.S. companies and vice versa appears increasingly unlikely in the near future.
