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U.S. President Donald Trump attends a bilateral meeting with Chinese President Xi Jinping during the G-20 Leaders’ Summit in Osaka, Japan on June 29, 2019.
Kevin Lamarque | Reuters
President Donald Trump on Thursday signed an executive order prohibiting Americans from investing in a set of Chinese companies that the White House says support Beijing’s military.
The ordinance prohibits American companies and individuals from owning shares as of right – or through investment funds – in companies that the administration sees as helping to strengthen the People’s Liberation Army.
The president said in the ordinance that “the People’s Republic of China (PRC) is increasingly exploiting the capital of the United States to recharge its batteries and enable the development and modernization of its military, intelligence and security apparatuses” .
This investment “continues to allow the PRC to directly threaten the United States homeland and American forces abroad, including by developing and deploying weapons of mass destruction, advanced conventional weapons, and malicious cyber actions against them. United States and their people “.
The ban will come into effect from 9:30 a.m. on January 11, 2021 and targets 31 companies identified by the Defense Ministry as “Chinese Communist Military Companion[ies]. “
The list of companies includes large state-run aerospace and construction companies, as well as technology and communications companies like Inspur Group, Huawei, and China Telecommunications Corp.
The United States contends that these companies enable China’s military evolution through access to advanced technology and expertise and, therefore, in part led to Beijing’s aggressive global expansion.
A Biden transition manager did not immediately respond to a request for comment on the newly signed order. A spokesperson for BlackRock, the world’s largest asset manager, said the company is still reviewing the details of the order.
The order comes after months of warnings from Trump’s national security and economic teams that more drastic measures could be taken to limit Americans’ exposure to companies that support China’s military ambitions or not. do not meet US disclosure and auditing standards.
National Economic Council Director Larry Kudlow and National Security Advisor Robert O’Brien have called on the administration for a crackdown on US investment in Chinese companies.
“The president’s action serves to protect American investors from the unintentional provision of capital intended to strengthen the intelligence services of the People’s Liberation Army and the People’s Republic of China,” O’Brien said in a statement. release Thursday.
Beijing’s intelligence services “routinely target American citizens and businesses through cyber operations and directly threaten critical infrastructure, America’s economy and military and its allies and partners around the world,” a- he added.
In May, Trump and the U.S. Department of Labor ordered the board overseeing billions of federal pension dollars to halt plans to invest in Chinese companies.
Labor Secretary Eugene Scalia then warned the Federal Retirement Thrift Investment Board that his current plan to invest federal savings would place “billions of dollars in retirement savings in risky businesses that pose a threat to national security. American ”.
The Labor Secretary, who cited bipartisan calls to restrict US investment in Chinese stocks, wrote that the president opposed the council’s 2017 decision to allow his international fund to track an index that includes stocks based in China based on national security concerns and investor risk. .
Investing in funds that include Chinese companies “would place millions of federal employees in the untenable position of forgoing any investment in international equities or placing billions of dollars in retirement savings in risky companies that pose a threat to the world. US national security, ”Scalia wrote.
– Christina Wilkie of CNBC contributed to this report.
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