US President Joe Biden plans to change the US ban on investing in companies linked to the Chinese military this week, after Trump-era policies were challenged in court and left investors confused about the extent of its reach to subsidiaries, people familiar with the mentioned file.
Under Biden’s amended order, the Treasury Department will create a list of companies that could face financial penalties for connecting to China’s defense and surveillance technology sectors, the people said. Until now, financial sanctions and the selection of targeted companies have been linked to a report by the Department of Defense mandated by Congress.
The amended order, which Biden is expected to sign later this week, will change the criteria for blacklisting entities to capture those operating in the defense or surveillance technology industries. The Trump order targeted companies owned, controlled, or otherwise affiliated with the Chinese military.
The Biden administration is expected to retain a large number of previously listed entities, and the Treasury’s Office of Foreign Assets Control will add new entities as part of the order, one of the people said. The Treasury would consult with the State and Defense Departments in the scoring process. Spokesmen for the White House and the Treasury Department did not respond to requests for comment.
Impact of actions
The United States must respect the rule of law and correct its mistakes, Chinese Foreign Ministry spokesman Wang Wenbin said during a regular press briefing in Beijing.
The ban “ignores the facts and real situation of the companies concerned, seriously undermines the normal rules and order of the market, and undermines the legal rights and interests of Chinese companies as well as the interests of global investors, including Americans. “, did he declare. âWe will take measures to firmly defend the interests of Chinese companies. Some stocks related to China’s defense industry fell on Thursday, led by AVIC Jonhon Optronic Technology and AECC Aviation Power, while the already blacklisted Advanced Micro-Fabrication Equipment fell 3.9%.
Xiaomi, which was taken off the list last month after challenging the Trump administration’s order in a lawsuit, rose 2.4% in Hong Kong. After two Chinese companies successfully challenged the order, Biden’s team said a review of the policy was needed to ensure it was legally sound and sustainable over the long term. By shifting responsibility to the Treasury, the Biden team aims to solidify the legal status of the sanctions, one of the people said.