US President Joe Biden has signed an executive order that bans US entities from investing in 59 Chinese companies that are allegedly linked to the Chinese military or surveillance activities. The order, which will take effect on August 2, 2023, expands on a previous order issued by former President Donald Trump in November 2020, which targeted 31 Chinese firms.
The new order aims to address the “unusual and extraordinary threats” posed by the Chinese companies to the national security, foreign policy, and economy of the United States, according to a White House statement. The order also gives the US Treasury Department the authority to update the list of banned companies in the future.
The list of prohibited companies includes major telecoms such as Huawei, ZTE, China Mobile, China Telecom, and China Unicom, as well as tech giants such as Hikvision, Dahua, and SMIC. The order also covers subsidiaries of the listed companies that are publicly traded in the US or abroad.
The order prohibits US investors from buying or selling any securities, including stocks, bonds, or derivatives, that are issued by or related to the listed companies. US investors who already hold such securities will have one year to divest from them.
The order is part of Biden’s broader strategy to counter China’s growing influence and assertiveness in the global arena. Biden has also pledged to work with allies and partners to confront China on issues such as trade, human rights, cybersecurity, and climate change.
The order has drawn criticism from Beijing, which accused Washington of abusing its national power and interfering in China’s internal affairs. A spokesperson for China’s Ministry of Foreign Affairs said that the order “severely undermines normal market rules and order” and “damages … the interests of global investors.” The spokesperson also urged the US to “respect the rule of law and the market” and “stop stretching the concept of national security.”
The order is expected to have significant implications for both US and Chinese businesses and investors. According to Bloomberg, the 59 Chinese companies have a combined market value of about $1.1 trillion, and some of them have significant exposure to US capital markets. The order could also affect the global supply chains and innovation ecosystems that rely on cross-border collaboration between US and Chinese firms.