Biden expands Trump-era order banning US investment in Chinese firms
US President Joe Biden expanded Trump-era ban on US investments in Chinese firms through an executive order signed on Thursday. Biden named 59 Chinese firms suspected of having ties to the Chinese military and surveillance infrastructure. The list includes Huawei in addition to three more Chinese telecommunication companies, which former US president Donald Trump had banned in his original executive order targeting Chinese establishment.
The executive order wasn't supposed to be public knowledge yet, but Biden administration officials apprised the media on the condition of anonymity. The order will take effect on August 2, with US investors being given a grace period of a year to divest fully from the 59 Chinese companies. This comes after bipartisan pressure to take China to task for human rights violations.
"This EO allows the United States to prohibit - in a targeted and scoped manner - US investments in Chinese companies that undermine the security or democratic values of the United States and our allies," said the White House through a press release.
The measure prevents US dollars from propping up China's defense sector, while also clamping down on Chinese firms helping the Chinese Communist Party (CCP) expand its surveillance infrastructure within China and outside. That's why, in addition to sanctions on Huawei, the executive order also includes Hangzhou Hikvision Digital Technology Co., which is responsible for developing surveillance equipment and facial-recognition technology for the CCP.
The order blacklists Chinese defense players such as Aviation Industry Corp. of China, Ltd., China North Industries Group Corp., China Aerospace Science and Industry Corporation Ltd., and China Shipbuilding Industry Co.—all targeted at tackling China's military industrial infrastructure. The ban also extends to China's top chipmaker Semiconductor Manufacturing International Corporation (SMIC), which has joined forces with Huawei on the raging Sino-US chip war.
The move comes as a surprise after Biden had relaxed Trump-era ban on entities such as TikTok and Xiaomi, while also suspending a critical Trump order banning the purchase of power grid equipment from China. It remains to be seen if Biden ups the ante by sanctioning Chinese officials involved in the mass detention of Chinese Uighur ethnic minorities and running slave labor camps.
As expected, the Chinese Foreign Ministry didn't take the news well and slammed the move, while reminding members of the press that Trump's original executive order exercised "total disregard of facts." The ministry spokesman called out the Biden administration for the sanctions, which he alleges undermines global financial markets. Biden's fresh order added 11 more Chinese companies to Trump's original list of 48.
"The US should respect the rule of law and the market, correct its mistakes, and stop actions that undermine the global financial market order and investors' lawful rights and interests," Chinese Foreign Ministry spokesman Wang Wenbin told reporters in Beijing.