Tencent has been designated a Chinese military company by the US Department of Defense, which the conglomerate calls a 'misunderstanding'

Tencent, one of the world's largest videogame publishers, is also a Chinese military company, the US Department of Defense claims. Which has come as something of a surprise to the conglomerate, which has called the designation a "misunderstanding".

The DoD's list of Chinese military companies is updated annually, and Tencent is among the new batch of additions for 2025. While this designation does not come with any sanctions, it demonstrably serves as a warning to US companies not to invest, and as a result Tencent's stock has taken a 7% hit in Hong Kong, as noted by Bloomberg's report.

The origins of the list go back to Trump's first reign, and with his imminent return to the White House, the relationship between China and the US is likely to become even more strained. But for Tencent specifically, a spokesperson claims that this designation won't have much of an impact, despite the effect on its stock.

"We are not a military company or supplier," they told Bloomberg. "Unlike sanctions or export controls, this listing has no impact on our business. We will nonetheless work with the Department of Defense to address any misunderstanding."

Companies included on the list can request to be removed, and this has precedent, so Tencent might be able to shake the new designation.

Chinese military companies are those either directly controlled by the People's Liberation Army or those providing it with support, but it's not clear what relationship the DoD believes Tencent has with the Chinese military. It does, however, have a close relationship with the Chinese Communist Party and has an in-house CCP branch—though this is not unusual in China, and indeed for any companies with multiple CCP members it's mandatory.

In a press briefing today, China's Foreign Ministry hit back against the DoD list. "We urge the US to immediately correct its wrongdoings and end the illegal unilateral sanctions and long-arm jurisdiction on Chinese companies."

It's worth noting that the US military has also had a long relationship with the videogame industry. Indeed, the US Army is a videogame developer and publisher, releasing several games in the America's Army FPS series since 2002. And in 2021 Microsoft signed a $22 billion deal to provide the US Army with AR headsets, designed to improve "situational awareness, target engagement, and informed decision-making". Sounds like a military company to me.

The US Army even sponsored Call of Duty League, and had planned an even larger campaign with Activision and Twitch streamers until the deal fell through due to sexual harassment allegations at the publisher.

More broadly, the US Army sees videogames as a recruitment tool, to the extent that it even created an esports team and tried to get into Twitch streaming (with hilarious results). And this has been going on since the 1980s. Shooters in particular are rife with jingoism, and military organisations the world over have long seen gamers as potential cannon fodder.

So if Tencent does have ties to the PLA, it's not doing anything that plenty of US-based companies haven't been openly doing for decades. But to be clear, it absolutely sucks whatever country it's happening in, and gamers shouldn't have to wonder if buying a game means they are indirectly supporting the military.