Washington bans U.S. investors from investing in 59 Chinese companies


The Biden administration prohibits Americans from investing in dozens of Chinese defense and surveillance technology companies to prevent China from using US capital to undermine national security.

President Joe Biden signed an executive order on Thursday prohibiting investment in 59 companies, including large Chinese groups such as telecommunications equipment manufacturer Huawei and China’s largest chip manufacturer Semiconductor Manufacturing International Corporation. The US intelligence agency said this The Chinese military is very important.

Senior US officials said that the ban will take effect on August 2. But investors can trade in the next 12 months to divest their holdings. Although Americans do not need to divest these securities, they will not be able to sell the securities they hold after the one-year period.

The executive order prohibits direct investment in debt and stock securities, but also prohibits Americans from investing in China Securities In their portfolio.

A senior U.S. official said: “The new executive order shows that the government intends to maintain and strengthen the ban on Chinese defense companies to ensure that Americans will not provide funding for the military-industrial complex of the People’s Republic of China.” Yes, its scope is designed to maximize the impact on the target while minimizing damage to the global market.”

The ban marks the latest effort by the Biden administration to take more and more measures Tough stand From the suppression of Uyghurs to aggressive military activities in the South China Sea and the East China Sea, they expressed dissatisfaction with everything in China. Biden is preparing to go to Europe to participate in the G7 summit, and China is expected to become a topic of discussion.

Former President Donald Trump issued a copy at the end of last year command It is forbidden to invest in companies listed by the Pentagon on the list of groups suspected of being linked to the People’s Liberation Army. But this move caused chaos in the financial markets because it had little guidance on implementation. The US court also ruled that the government did not provide sufficient evidence to justify the inclusion of a company on the target list under certain circumstances.

Senior officials said that Biden’s order will ensure that the investment ban has a stronger legal basis. They added that it will expand Trump’s order to include surveillance companies including Hikvision, which are accused of helping Beijing persecute more than 1 million Muslim Uyghurs detained in detention camps in northwestern Xinjiang. people.

Target companies also include Aviation Industry Corporation of China, China National Offshore Oil Corporation, China Railway Construction Corporation and China National Nuclear Corporation. This list also includes China’s three major telecommunications companies: China Mobile, China Telecom and China Unicom.

“At first glance, this is an extraordinary list of Chinese company names. The momentum that the previous government started in terms of capital market sanctions seems to have been sustained and strengthened,” said the former chairman of the US-China Economic and Security Review Committee of the US Congress and a consulting firm. Said Roger Robinson, head of the RWR Advisory Group.

Later on Thursday, the Pentagon is expected to release its updated version. List of Chinese companies Contact with the People’s Liberation Army, after Congress requested the Ministry of Defense to provide a new list every year. But the senior official said that the Pentagon’s list has nothing to do with the investment ban outlined in the new executive order.

The official stated that the Pentagon’s list would allow it to “flexibly disclose information to a wide range of stakeholders, indicating companies that have extensive connections with different departments of the Chinese government”.

The latest directive will provide clear information to investors, exchanges and index providers who have been caught in the crossfire between the Trump administration’s China hawks and the leadership of the Treasury Department in the past year.

In December and January last year, the index provider removed Chinese stocks related to the military from its index. In the first few days of 2021, the New York Stock Exchange announced the delisting of China Mobile, China Telecom and China Unicom’s US-listed stocks, and then briefly overturned this decision.

Change Eventually removed Under pressure from the Trump administration, these three companies, including then Treasury Secretary Steven Mnuchin. Financial platforms such as Bloomberg now clearly warn US investors when they may trade sanctioned securities.

Additional reporting by Eric Platt in New York

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