The US has added several Chinese technology companies, including gaming and social media giant Tencent and battery maker CATL, to a list of firms it says are working with the Chinese military.
The list serves as a warning to US companies and organizations about the risks of doing business with Chinese entities.
While the inclusion does not mean an immediate ban, it could increase pressure on the US Treasury Department to sanction the firms.
Tencent and CATL denied being linked to 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 1260H list, is updated annually and now includes 134 firms.
It is part of Washington's approach to countering what it sees as Beijing's efforts to increase its military might by using technology from Chinese firms, universities and research programs.
In response to the latest announcement, Tencent, which owns the WeChat messaging app, said its listing was “obviously a mistake.”
“We are not a military company or supplier. Unlike sanctions or export controls, this list has no impact on our business,” a company spokesman told the BBC.
CATL also called the designation a mistake and said it “does not engage in any military activities.”
“The practices of the United States violate the principles of market competition and international economic and trade rules that it has always protected, and undermine the confidence of foreign companies to invest and operate in the United States,” said Liu Pengu, a spokesman for the Chinese Embassy in Washington.
The Pentagon has come under pressure from US lawmakers to add some of the firms, including CATL, to the list.
The push came as US car giant Ford said it would invest $2bn (£1.6bn) in building a battery plant in Michigan. He said he plans to license technology from CATL.
Ford did not immediately respond to a BBC request for comment.
The announcement comes as relations between the world's two largest economies remain strained.
Meanwhile, President-elect Donald Trump, who has previously taken a hard line against Beijing, is due to return to the White House this month.
The Pentagon was sued last year by drone maker DJI and lidar maker Hesai Technologies over their inclusion on the list. The two remain on the updated list.