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The Biden administration bans Americans from investing in dozens of Chinese defense and surveillance companies to prevent US capital from being used to harm China’s national security.
President Joe Biden on Thursday signed an order banning investments in 59 companies, including Huawei telecommunications equipment maker and Semiconductor Manufacturing International Corporation, China’s largest chip maker, which U.S. intelligence believes is very important to the Chinese military.
Senior U.S. officials have said the ban will take effect Aug. 2. But investors can do business to remove their stakes in the next 12 months. If Americans do not have to dispose of the securities, they will not be able to sell their shares after a period of one year.
The enforcement order prohibits direct investment in debt or equity, but Americans are also prohibited from investing in funds that have this. Chinese values in their wallets.
“The new executive order states that the administration intends to maintain and build bans on Chinese defense companies to ensure that U.S. people do not fund the military set of industries in the People’s Republic of China,” a senior U.S. official said. “Prohibitions are intentionally addressed and to maximize impact on targets, while global markets minimize harm.”
The ban is the latest effort the Biden administration has finally made hawkish attitude From the Uyghur repression about China to the aggressive military activity in the southern and eastern seas of China. Biden is preparing to travel to Europe to attend the G7 summit, where China is expected to be under discussion.
Former President Donald Trump released it late last year order The Pentagon banned investments in companies that put it on a list of groups with alleged links to the People’s Liberation Army. But the move caused confusion in financial markets because it provided little guidance on implementation. U.S. courts have also ruled that the government in some cases did not provide enough evidence to justify placing a company on the target list.
Top officials said Biden’s order would ensure that the investment ban would have a stronger legal basis. They added that Trump will extend the order including surveillance companies, including Hikvision, accused of helping Beijing persecute more than 1 million Uighur Muslims detained in detention camps in the northwestern Xinjiang region.
Targeted companies include China Aviation Industry Corporation, China National Offshore Oil Corporation, China Railway Construction Corporation and China National Nuclear Corporation. The list also includes three major Chinese telecommunications companies: China Mobile, China Telecom and China Unicom.
“At first glance, this is a separate list of names of Chinese corporations. It seems that the previous administration has been a sustained and constructive impetus for capital market sanctions,” said Roger Robinson, former chairman of the US-China Economic and Security Review Committee, RWR Advisory Group.
On Thursday, the Pentagon is expected to release an updated version List of Chinese companies With PLA connections, Congress asked the Department of Defense to provide a new list each year. But a senior official said the Pentagon’s list will have no effect on the investment ban outlined in the new executive order.
The official said the Pentagon’s list will “give it the flexibility to publicly send messages to a wide range of stakeholders about companies with multiple ties to various parts of the Chinese government.”
The latest directive will shed light on investors, exchanges and index providers caught in the crossfire between Chinese hawks within the Trump administration and Treasury Department over the past year.
In December and January, index providers cleared Chinese shares of their indexes with ties to the military. And in the early days of 2021, the New York Stock Exchange announced that China Mobile, China Telecom and China Unicom would remove shares listed in the U.S. before the decision was shortened.
Exchange finally remove the three companies came under pressure from the Trump administration, including then-Secretary of the Treasury Steven Mnuchin. Financial platforms like Bloomberg explicitly warn U.S. investors when they can trade safely with penalties.
Additional report by Eric Platt in New York
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