The Trump administration on Thursday (Nov 12) unveiled an executive order prohibiting US investments in Chinese firms that Washington says are owned or controlled by the Chinese military, ramping up pressure on Beijing after the US election.
The order, which was first reported by Reuters, could impact some of China's biggest companies, including telecoms firms China Telecom, China Mobile and surveillance equipment maker Hikvision.
The move is designed to deter US investment firms, pension funds and others from buying and selling shares of 31 Chinese companies that were designated by the Defence Department as backed by the Chinese military earlier this year.
Starting Jan 11, the order will prohibit any transaction by US investors in the securities of those companies. It also bans Americans from buying and selling securities in a Chinese company 60 days after it's designated as a Chinese military company.
"China is increasingly exploiting United States capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses," said the order released by the White House.
The move is the first major policy initiative by President Donald Trump since losing the Nov 3 election to Democratic rival Joe Biden and indicates that he is seeking to take advantage of the waning months of his administration to crack down on China, even as he has appeared laser-focused on challenging the election result.
Biden has won enough of the battleground states to surpass the 270 electoral votes needed in the state-by-state Electoral College that determines the next president, but Republican Trump has so far refused to concede, citing unsubstantiated claims of voting fraud.
Thursday's action is likely to further weigh on already fraught ties between the world's top two economies, which are at loggerheads over China's handling of the coronavirus pandemic and its move to impose security legislation on Hong Kong.
Biden has not laid out a detailed China strategy but all the indications are that he'll continue a tough approach to Beijing, with whom Trump has become increasingly confrontational in his the previous year in office.
The executive order takes a page from a Bill, filed by Republican senator Marco Rubio the previous month, to block access to US capital markets for Chinese companies that have been blacklisted by Washington.
It's part of a growing effort by Congress and the administration to thwart Chinese companies that enjoy the backing of US investors but do not comply with US rules faced by American rivals.
In August, US Securities and Exchange Commission and Treasury officials urged Trump to delist Chinese companies that trade on US exchanges and fail to meet its auditing requirements by January 2022.