white house expands investment ban on chinese tech and telecom companies
New Restrictions on Chinese Investments Implemented
The current administration has both modified and broadened the investment restrictions initially enacted during the Trump era, targeting specific Chinese companies. These firms are believed to contribute to China's surveillance capabilities and military development.
Executive Order Details
An initial group of 59 companies are subject to the executive order, with the Treasury Department authorized to add further entities as needed. President Biden’s statement within the order identifies the use of Chinese surveillance technologies and their role in human rights abuses as “unusual and extraordinary threats.”
Evolution from Previous Policies
This executive order builds upon the groundwork laid by the previous administration’s ongoing efforts to blacklist Chinese companies. Restrictions were initially applied to companies like ZTE and Huawei in 2019, with subsequent additions over time.
Expanded Definition of Risky Behavior
The Biden administration’s order clarifies and expands the criteria for identifying companies engaged in concerning activities. It now encompasses firms involved in surveillance of Uygur Muslims within China and political dissidents in Hong Kong and other locations.
Companies Affected by the Order
The updated list incorporates many previously designated companies and includes numerous additions. Companies operating in the technology, communications, and aerospace sectors are particularly vulnerable to inclusion, including China Mobile, China Unicom, China Aerospace, Hikvision, and SMIC.
Investment Restrictions
Direct investment in these listed companies is now prohibited. This restriction extends to investments made through intermediaries, such as index funds that hold shares in the prohibited entities.
Shift in Responsibility
The responsibility for maintaining and updating the list has been transferred from the Department of Defense to the Treasury Department. This includes the authority to add or remove companies as deemed necessary.
Administration’s Stated Goals
A fact sheet released alongside the order emphasizes the administration’s commitment to safeguarding U.S. national security interests and democratic values. The list of Chinese entities will be continually reviewed and updated.
Continuation of Trade Policies
The White House intends to continue and refine the trade policies towards China that were initiated by the prior administration. The effectiveness of U.S. pressure and the need for international support will likely become apparent during the president’s upcoming visits with allies.
Seeking International Support
The president is actively seeking support from international allies on this matter, as well as other related measures. This suggests a broader strategy to address concerns regarding Chinese policies.