The Biden administration issued a new executive order Thursday (June 3) prohibiting U.S. entities from buying or selling publicly traded securities of 59 Chinese companies related to Communist Party defense and surveillance technology.
The new executive order still retains most of the Chinese entities currently on the blacklist, with the Treasury Department’s Office of Foreign Assets Control instead responsible for adding to the list, rather than the previous Defense Department, and the ban will take effect Aug. 2.
A senior White House official told Reuters before the executive order was issued that the new order is intended to make the original Trump-era ban more legally sound and also shows that the Biden administration wants to “make sure that Americans don’t fund the military industrial complex in the People’s Republic of China.
The officials said Biden expanded the scope of the previous order by including Chinese surveillance technology companies. The previous ban focused on the defense technology sector.
“We can 100 percent expect that in the coming months …… we will add more companies (to the blacklist) under the restrictions of the new executive order,” one official said.
The Biden administration has been reviewing U.S. policy toward China, and less than 10 days after he took office, the Treasury Department announced an executive order on Jan. 27 that postpones the ban on military-related Chinese companies, originally scheduled to take effect Jan. 28, until May 27.
The White House released the list of blacklisted Chinese companies in a press release Thursday afternoon.
“We want to make sure that any future ban is on solid legal footing. So our first list really reflects that,” a second senior administration official said.
A third official said investors will have time to “unwind” their investments.
The Trump-era ban on military-related Chinese companies has been the subject of judicial challenges since last year and has confused Wall Street because of its unclear scope, which covers subsidiaries of Communist Party military companies. Under the Trump-era executive order, U.S. financial sanctions and targeting of companies involved in the Chinese Communist Party’s military should be reported by the Defense Department and authorized by Congress.
Biden’s “investment blacklist” inclusion criteria will be changed to focus on technology-based companies in the defense or surveillance sectors. Under Trump, the target would be all companies identified as owned, controlled, or affiliated with the Chinese Communist military.