Virtual Legality

In this episode, Richard Hoeg explores the US Department of Defense's CMC designation and its business impacts on Tencent Holdings. He covers legal background, executive orders, and insights from Bloomberg, analyzing market reactions and clarifying misunderstandings. The discussion includes the National Defense Authorization Act, Trump's executive orders, and more. Hoeg provides historical context, examines Tencent's situation, and the Department of Defense's role in US-China relations. He also considers potential actions by the future administrations and their effects on Tencent's global market presence, concluding with national security debates and possible legal proceedings.

LINKS

MILITARY DESIGNATION
https://www.theverge.com/2025/1/6/24337489/tencent-catl-us-defense-department-chinese-military-companies
https://archive.ph/FPpBi
https://public-inspection.federalregister.gov/2025-00070.pdf

TRUMP/1237
https://www.cnbc.com/2020/11/12/trump-bans-investments-in-companies-that-aid-chinas-military.html
https://www.federalregister.gov/documents/2020/11/17/2020-25459/addressing-the-threat-from-securities-investments-that-finance-communist-chinese-military-companies
https://www.defense.gov/News/Releases/Release/Article/2328894/dod-releases-list-of-additional-companies-in-accordance-with-section-1237-of-fy/

MCFs AND 1260H
https://www.lawfaremedia.org/article/chinese-military-civil-fusion-and-section-1260h-congress-incorporates-defense-contributors
https://en.wikipedia.org/wiki/Brookings_Institution
https://www.cmtradelaw.com/2024/02/dod-is-making-its-list-and-checking-it-twice-dod-updates-1260h-chinese-military-companies-list/

LEGAL ACTION?
https://www.bbc.com/news/articles/c9q78wn9g8zo
https://www.eurogamer.net/tencent-threatens-legal-proceedings-if-us-doesnt-overturn-decision-to-label-it-as-a-chinese-military-company
https://www.rockpapershotgun.com/worlds-biggest-game-publisher-tencent-threaten-to-sue-us-government-for-listing-them-as-a-chinese-military-company
https://static.www.tencent.com/uploads/2025/01/07/ed277c23e9fe0fc870fb9f02350e7658.pdf
https://www.theverge.com/2024/10/19/24274153/dji-sues-us-dod-chinese-military-company

(0:00) Introduction and overview of the topic
(1:12) US Department of Defense's designation explained and potential business impacts
(2:35) Legal background, executive orders, and Bloomberg article insights
(3:33) Market reactions, Citigroup analyst perspective, and clarification of sanctions
(5:39) Examination of William M. Thornberry National Defense Authorization Act and Federal Register details
(7:27) Trump's executive order, section 1237 vs 1260h, and legal implications
(10:22) Historical context, reporting requirements, and legislative amendments
(13:05) Definitions, implications for Tencent, and legal interpretations
(15:04) Department of Defense's discretion and implications for US-China relations
(17:23) Potential future actions by the Biden administration and Brookings Institution's perspective
(20:49) Specific prohibitions and overview of Tencent's global market presence
(22:57) Tencent's gaming investments and impact of US designation
(25:02) Clarification on the CMC list, potential legal proceedings, and DJI precedent
(30:12) US government actions, national security debate, and closing remarks