The move is a continuation and tidying of policies first implemented by President Donald Trump last year
Back in November 2020, then-President Donald Trump signed an executive order banning Americans from investing in companies that the US deemed to have links to the Chinese military.
This previous designation had initially placed 31 companies on the blacklist, including Huawei and all three of China’s largest mobile operators, China Mobile, China Unicom, and China Telecom. However, the scope of the order quickly came under scrutiny and legal challenges.
In total, 48 Chinese companies were cut off from US investment as a result of this order.
Now, Preisdent Joe Biden has issued a new executive order of his own, expanding on and shoring up the previous order against legal challenges. The order names 59 Chinese companies with connections to China’s defense and surveillance technology sectors, with the list compiled by the US Treasury Department, rather than the Defense Department as was previously the case.
The list notably still includes major telecoms players such as Huawei, China Mobile, China Unicom, and China Telecom, but also notably includes Hangzhou Hikvision Digital Technology Co., a company that develops surveillance equipment reportedly been used by authorities to persecute ethnic Uyghurs within China. Semiconductor Manufacturing International Corporation (SMIC), China’s largest semiconductor foundry company, is also included on the list.
Not included are DJI, WeChat, TikTok, or its parent company ByteDance.
The move comes after the legal challenges of a number of Chinese companies proved successful in seeing them removed from Trump’s investment blacklist. In May, for example, a judge ruled that Chinese phonemaker Xiaomi should be removed from the list. Thus, the Biden administration said that a revision was needed to make the policy clearer and more viable as a long-term strategy.
“We really want to make sure that any future prohibitions are on legally solid ground. So, our first listings really reflect that," said a senior administration official.
Officials warn the list is likely to expand in the coming months as further assessments are performed.
“We fully expect that in the months ahead … we’ll be adding additional companies to the new executive order’s restrictions," said the official.
Investors were told they would have time to “unwind” their investments, according to a spokesperson. The policy comes into effect on 2 August.
This ban is perhaps the clearest evidence so far that President Biden intends to continue the ‘tough on China’ approach followed by his predecessor.
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