U.S. extends ban on securities investments in companies linked to China military (updated)

Luokung Technology

09/11/2021 17:36

(Adds comment by former chairman of U.S. government independent
agency, background)
    WASHINGTON, Nov 9 (Reuters) - The United States will
continue a Trump-era ban on U.S. investments in Chinese
companies that Washington says are owned or controlled by the
Chinese military, President Joe Biden said on Tuesday.
    Biden, a Democrat who has continued some of President Donald
Trump's policies on China, said he would extend the restrictions
laid out in his Republican predecessor's executive order of
November 2020.
    "The PRC is increasingly exploiting United States capital to
resource and to enable the development and modernization of its
military, intelligence, and other security apparatuses, which
continues to allow the PRC to directly threaten the United
States homeland and United States forces overseas," Biden said
in a letter to House of Representatives Speaker Nancy Pelosi.
    The executive order was originally designed to deter U.S.
investment firms, pension funds and others from buying shares of
Chinese companies that were designated by the Department of
Defense as backed by the Chinese military.
    Biden in June made changes to what his team described as the
"legally flawed" Trump-era order, tasking the Treasury
Department with enforcing and updating on a “rolling basis” a
new list of about 59 companies that replaced the earlier list
from the Pentagon. 
    U.S. entities are barred from buying or selling publicly
traded securities in target companies, which include China's top
chipmaker SMIC  0981.HK  and oil giant CNOOC  SASACY.UL . 
    Biden's new list added about 10 publicly listed companies,
but removed some other top names including Commercial Aircraft
Corp of China (COMAC), which is spearheading efforts to compete
with Boeing Co  BA.N  and Airbus  AIR.PA , and two that
challenged the ban in court - Gowin Semiconductor Corp and
Luokung Technology Corp  LKCO.O . 
    China hawks in Washington applauded Biden's extension of the
policy, but took aim at the administration's failure to add new
companies to the list since the June revisions.
    “While we should applaud the extension of the ‘national
emergency’... it’s hard to understand why not one Chinese
company has been added to this modest capital markets sanctions
list since the issuance of the Order on June 3,” said Roger
Robinson, former chairman of the congressional U.S.-China
Economic and Security Review Commission. 
    Biden said China's military-industrial complex, supported by
its intelligence and other security, continues to constitute an
unusual and extraordinary threat.

 (Reporting by Doina Chiacu and Alexandra Alper in Washington
Editing by Jonathan Oatis and Matthew Lewis)
 ((jonathan.oatis@thomsonreuters.com; +1 646 270-4388;))