The Trump administration yesterday unveiled an executive order prohibiting US investments in Chinese firms that Washington says are owned or controlled by the Chinese military, ramping up pressure on Beijing after the US election.
The order, which was first reported by Reuters, could impact some of China’s biggest companies, including telecoms firms China Telecom Corp Ltd, China Mobile Ltd and surveillance equipment maker Hikvision.
The move is designed to deter US investment firms, pension funds and others from buying and selling shares of 31 Chinese companies that were designated by the Defense Department as backed by the Chinese military earlier this year.
Starting January 11, the order will prohibit any transaction by US investors in the securities of those companies. It also bans Americans from buying and selling securities in a Chinese company 60 days after it is designated as a Chinese military company.
“China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses,” said the order released by the White House.
The Chinese embassy in Washington did not immediately respond to a request for comment.
White House trade adviser Peter Navarro estimated that at least half a trillion dollars in market capitalisation was represented by the Chinese companies and their subsidiaries.
“This is a sweeping order designed to choke off American capital to China’s militarisation,” he told reporters on a call about the move.
The move is the first major policy initiative by President Donald Trump since losing the November 3 election to Democratic rival Joe Biden and indicates that he is seeking to take advantage of the waning months of his administration to crack down on China, even as he has appeared laser-focused on challenging the election result.
Biden has won enough of the battleground states to surpass the 270 electoral votes needed in the state-by-state Electoral College that determines the next president, but Republican Trump has so far refused to concede, citing unsubstantiated claims of voting fraud.
Yesterday’s action is likely to further weigh on already fraught ties between the world’s top two economies, which are at loggerheads over China’s handling of the coronavirus pandemic and its move to impose security legislation on Hong Kong.
Biden has not laid out a detailed China strategy but all the indications are that he will continue a tough approach to Beijing, with whom Trump has become increasingly confrontational in his last year in office.
