On Thursday, President Joe Biden dropped an executive order controlling investment in Chinese companies. The new order controls US entities from investing in several Chinese companies. Banned companies are those with alleged ties to defence or surveillance technology sectors, Reuters reports.
More about the order
The move, according to Biden’s administration, is an expansion from Trump-era order. However, the revised order received the same response from Beijing just as the first time the order dropped. China seems to be still greatly disappointed at the new order drop.
Senior administration officials told reporters that the Treasury Department will implement and update the new list of around 59 businesses. Another thing to note is that the new order prohibits purchasing or selling publicly listed stocks in target businesses. The updates, going on a “rolling basis” will also replace a prior list from the Department of Defense.
Chinese companies banned from US investments are the Chinese military-industrial complex. Military, intelligence, and security research and development programs, are also included in the list.
“In addition, I find that the use of Chinese surveillance technology outside the PRC and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats,” Biden explained, borrowing the acronym for the People’s Republic of China.
Quoted from Reuters, among the banned companies are Aviation Industry Corp of China (AVIC), China Mobile Communications Group, China National Offshore Oil Corp (CNOOC), Hangzhou Hikvision Digital Technology Co Ltd, Huawei Technologies Ltd (HWT.UL) and Semiconductor Manufacturing International Corp (SMIC).
However, a senior official further added, “We fully expect that in the months ahead … we’ll be adding additional companies to the new executive order’s restrictions.”
The order will start prohibiting investment in the listed companies starting from the second of August. US investors are given 365 days from the day the order is published or future listings to arrange transactions for the purpose of divesting. Divesting later than 365 days after listing will be automatically prohibited without authorization.
China’s response on the new order
In response to the new order, a spokesman at the Chinese foreign ministry, Wang Wenbin, said, “The U.S. government is stretching the concept of national security, abusing national power and using every possible means to suppress and restrict Chinese enterprises”.
Read also: Huawei Saw Significant Sales Drop in Q1 2021