The United States has added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of companies it says are working with the Chinese military.
The list serves as a warning to American companies and organizations about the risks of doing business with Chinese entities.
While the listing does not mean an immediate ban, it could increase pressure on the US Treasury to punish the companies.
Tencent and CATL denied involvement with the Chinese military, while Beijing said the decision amounted to “unreasonable suppression of Chinese companies.”
The Department of Defense (DOD) list of Chinese military companies, officially known as the Section 1260H List, is updated annually and now includes 134 companies.
This is part of Washington's approach to counter what it sees as Beijing's efforts to increase its military power using technology from Chinese companies, universities and research programmes.
In response to the latest announcement, Tencent, which owns messaging app WeChat, said its inclusion on the list was an “obvious error.”
“We are not a military company or supplier,” she said in a statement to Reuters news agency. “Unlike sanctions or export controls, this listing has no impact on our business.”
CATL also called the designation an error and said it “is not involved in any military related activities.”
Liu Bingyu, spokesman for the Chinese Embassy in Washington, said: “The US practices violate the principles of market competition and international economic and trade rules that it has long defended, and undermine the confidence of foreign companies to invest and operate in the United States.” .
The Pentagon has come under pressure from US lawmakers to add some companies, including CATL, to the list.
This pressure came at a time when American auto giant Ford announced that it would invest $2 billion (£1.6 billion) to build a battery factory in Michigan. It said it plans to license the technology from CATL.
Ford did not immediately respond to the BBC's request for comment.
This announcement comes at a time when relations between the world's two largest economies remain tense.
Meanwhile, President-elect Donald Trump, who has previously taken a hard-line stance against Beijing, is set to return to the White House this month.
The Pentagon was sued last year by drone maker DJI and lidar maker Hesai Technologies over its inclusion on the list. Both remain on the updated list.
