The United States will continue a Trump-era ban on U.S. investments in Chinese companies that Washington says are owned or controlled by the Chinese military, President Joe Biden said on Tuesday.
Biden, a Democrat who has continued some of President Donald Trump’s policies on China, said he would extend the restrictions laid out in his Republican predecessor’s executive order of November 2020.
“The PRC is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas,” Biden said in a letter to House of Representatives Speaker Nancy Pelosi.
The executive order was originally designed to deter U.S. investment firms, pension funds and others from buying shares of Chinese companies that were designated by the Department of Defense as backed by the Chinese military.
Biden in June made changes to what his team described as the “legally flawed” Trump-era order, tasking the Treasury Department with enforcing and updating on a “rolling basis” a new list of about 59 companies that replaced the earlier list from the Pentagon.
U.S. entities are barred from buying or selling publicly traded securities in target companies, which include China’s top chipmaker SMIC (0981.HK) and oil giant CNOOC (SASACY.UL).
Biden’s new list added about 10 publicly listed companies, but removed some other top names including Commercial Aircraft Corp of China (COMAC), which is spearheading efforts to compete with Boeing Co (BA.N) and Airbus (AIR.PA), and two that challenged the ban in court – Gowin Semiconductor Corp and Luokung Technology Corp (LKCO.O).
China hawks in Washington applauded Biden’s extension of the policy, but took aim at the administration’s failure to add new companies to the list since the June revisions.
“While we should applaud the extension of the ‘national emergency’… it’s hard to understand why not one Chinese company has been added to this modest capital markets sanctions list since the issuance of the Order on June 3,” said Roger Robinson, former chairman of the congressional U.S.-China Economic and Security Review Commission.
Biden said China’s military-industrial complex, supported by its intelligence and other security, continues to constitute an unusual and extraordinary threat.