All American investment in Chinese companies that the United States government deems to have relationship with the Chinese military will not be prevented under and order issued by the US President Donald Trump.
China was accused in the order by Trump of “increasingly exploiting” US investors “to finance the development and modernisation of its military”.
The ban order, which is to come into effect from January, could impact a number of biggest publicly listed companies of China which includes China Telecom and the tech company Hikvision.
Multiple efforts to disentangle the US from its close economic ties with China have been undertaken by Trump throughout his tenure as the US President.
While imposing sanctions on some of its tech companies, Trump has also imposed punitive import duties on Chinese goods imported into the US worth billions of dollars.
Issues such as coronavirus, and China’s moves in Hong Kong have also soured the relations between the two superpowers.
The Trump administration had been reviewing the latest order for a few months. Earlier this year, the US government had identified 31 firms that have direct or indirect investments from the US and the firms are supported by the Chinese military. These companies are included in the list which includes Chinese tech companies and large state-owned construction companies among others.
The order gives a one year time line for US investors to comply with the rules.
Having lost the race to US presidency to Joe Biden earlier this month, Trump will have to leave the White House soon after the latest ban would come into effect.
While not explicitly spelling out his China policy, the incumbent president Biden promised to challenge the Chinese government on similar issues as was done by Trump, including trade abuses and cyber-theft, during his speeches in the run up to the elections,
The position that Trump had taken against China is perhaps the only issue which has been able to draw bipartisan support from both the Democrats and Republicans.
Implementation of laws to block US investment in firms the White House designates as threats have been proposed by several politicians in Congress.
The US pension fund for government employees was ordered by Trump earlier this year to not make any plans of investing in Chinese companies. Consideration of delisting of Chinese companies listed in US stock exchanges if such companies do not comply with US audit rules have also been previously announced by the Trump administration. This planned move came at a time when there has been a growth in US exposure to companies listed on Chinese stock exchanges.
But those investments represent only a miniscule portion of the overall US holdings. About $43.5bn in Chinese stocks and bonds at the end of April were geld by US mutual funds, according to estimates made by researchers for financial regulators at the US Securities and Exchange Commission as published by it in a report earlier this year.
(Adapted from BBC.com)