US Blacklisting China's Tech Giants Poses Greater Risk of Rapid Decoupling

The latest move by the U.S. to expand its list of Chinese military companies risks doing more than just lowering the stock prices of some of its most valuable firms.

The Biden administration added the world's largest gaming publisher Tencent and Contemporary Amperex Technology Co. Limited (CATL), a key battery supplier for Tesla, to its "Chinese military companies" list on Monday. Since the list was published in 2021, it has expanded to include 134 companies, including four of China's top 20 by market value, with a total value of nearly $1 trillion.

Unlike the Department of Commerce's Entity List, this list does not impose specific sanctions, but it deters U.S. firms from doing business with its members, leading to reputational damage for the involved companies.

According to Kishore Mahbubani, Singapore's former UN ambassador, this approach carries a risk of backlash for Washington, labeling the recent addition as "foolish." Mahbubani stated, "The whole world is moving towards trusting Chinese companies, including a number of products from Tencent and CATL. If the U.S. tries to separate itself from Chinese companies and their global reach, it will not only be separate from China but also from the rest of the world."

Josef Gregory Mahoney, an international relations professor at East China Normal University in Shanghai, commented, "We will have to see whether this strategy will be significantly revised by the incoming Trump administration. Traditional wisdom suggests it won't, but there are some compelling reasons to change course."