The Biden administration is banning investment in dozens of Chinese defense and surveillance technology companies in an effort to prevent American capital from using the U.S. capital to undermine national security.
President Joe Biden signed an executive order on Thursday, in which Marquee China Group, a telecom equipment maker like Huawei, and Semiconductor Manufacturing International Corporation, China’s largest chip maker, criticized U.S. intelligence for the Chinese military.
Senior U.S. officials said the ban would take effect on August 2, but investors would be able to do business to transfer their holdings within the next 12 months. Although Americans are not required to divest securities, they will not be able to sell their holdings after the one-year period has elapsed.
The executive order prohibits direct investment in both debt and equity securities, but prohibits Americans from investing in funds. Chinese Securities In their portfolios.
“The new executive order indicates the administration’s intention to maintain and maintain U.S. sanctions on Chinese defense companies so that Americans do not want to finance the People’s Republic of China’s military industrial complex,” said a senior U.S. official. “Sanctions are deliberately targeted and the impact on targets must be maximized while minimizing losses in global markets.”
The latest attempt by the Biden administration to identify the growing ban has been identified Betting position To China about everything from the suppression of the Uyghurs to the aggressive military activity in the South and East China Seas. As Biden prepares to travel to Europe to attend the G7 summit, China is expected to be the subject of discussion there.
Former President Donald Trump issued one late last year Order The Pentagon has banned investment in companies that have a list of companies that have suspicious links to the People’s Liberation Army. But the move caused confusion in the financial markets as it brought very little guidance on implementation. The U.S. court later ruled that the government had not provided sufficient evidence to justify its inclusion in the target list.
Senior officials said Biden’s order would ensure that the investment ban has a stronger legal basis. They added that they would extend Trump’s order to include surveillance agencies, including Hickvision, against allegations that Beijing helped torture more than 1 million Muslim Uighurs held in detention camps in northwestern Xinjiang.
Targeted companies include China’s Aviation Industry Corporation, China National Offshore Oil Corporation, China Railway Construction Corporation and China National Atomic Corporation Corporation. The list includes three major Chinese telecom companies: China Mobile, China Telecom and China Unicom.
“At first glance, this is quite an exceptional list of Chinese corporate names. The momentum initiated by the previous administration on capital market sanctions seems to have been maintained and seems to have been built, ”said Roger Robinson, an adviser to the former chairman of the congressional US-China Economic and Security Review Commission.
The Pentagon is expected to release an updated version later on Thursday List of Chinese companies With PLA connections, Congress was required to provide a new list to the Department of Defense each year. But the official said the Pentagon’s list of investment bans in the new executive order would have no effect.
The official said the Pentagon list would “give the Chinese government the flexibility to publicly inform a wide range of stakeholders about companies with extensive connections to different parts of the government.”
The latest directive will offer clarity to investors, exchanges and index providers who have been caught in a crossfire between the Chinese market over the past year under the leadership of the Trump administration and the Treasury Department.
In December and January, index suppliers cleared military-related Chinese stocks from their indices. And in the first few days of 2021, the New York Stock Exchange briefly announced the listing of US listed shares of China Mobile, China Telecom and China Unicom before reversing the decision.
Change Move to the end Three agencies, including then-Treasury Secretary Steven Munuchin, came under pressure from the Trump administration. Financial platforms like Bloomberg explicitly warn U.S. investors if they can trade on something that is protected by sanctions.
Additional report by Eric Platt of New York
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