Key facts
- Hong Kong lawmakers are increasingly connected with Chinese companies designated by the U.S. as having military ties, according to CSRI research.
- The U.S. Defense Department has added 134 companies, including Tencent, SenseTime, and CATL, to its list of Chinese Military Companies (CMC).
- The National Defense Authorization Act of 2024 prohibits Defense Department dealings with these companies from June 2026.
- A congressional report alleges U.S. banks, including JPMorgan Chase and Bank of America, helped CATL raise billions through stock offerings despite its designation.
- The report states these transactions were legal but criticizes banks for disregarding the U.S. government's designation.
Hong Kong lawmakers are reportedly increasing their connections with Chinese companies that the U.S. has blacklisted due to alleged military ties, according to new research by the London-based China Strategic Risks Institute (CSRI). This development raises concerns about potential sanctions risks and the future of Hong Kong's status as a global financial center.
The U.S. Defense Department has been updating its list of "Chinese Military Companies" (CMC), which now includes 134 entities. Recent additions include major technology and manufacturing firms such as Tencent, SenseTime, and CATL. The National Defense Authorization Act of 2024 mandates that the Defense Department cease dealings with these designated companies starting in June 2026.
In response to its inclusion on the list, Tencent stated that it is not a military company and plans to seek a reconsideration and potentially legal action to be removed. The company emphasized that inclusion on the CMC list pertains to U.S. defense procurement and does not directly impact its business operations.
Separately, a report from the House Select Committee on the Chinese Communist Party has accused major U.S. financial institutions, including JPMorgan Chase, Bank of America, and Morgan Stanley, of facilitating billions of dollars in fundraising for CATL through initial public offerings and subsequent stock offerings. The report acknowledges that these transactions were legal under current U.S. law but criticizes the banks for proceeding despite the Pentagon's designation of CATL as a military-linked company. Investigators allege that the banks prioritized profits over the U.S. government's national security concerns, accepting CATL's assurances of no military ties despite what the committee described as incomplete due diligence and publicly available evidence suggesting otherwise.