President Donald Trump on Wednesday (Jan. 13) issued his latest executive order requiring U.S. investors to divest securities of Chinese companies deemed to be owned or controlled by the Communist Party of China’s military starting Nov. 11, 2021 EST.
The executive order will further strengthen Executive Order 13959, issued last November, the latest reinforcement of Trump’s move to curb Chinese Communist Party access to U.S. capital markets, issued on the penultimate seven days before he leaves office.
Under the new order, as of 11:59 p.m. EST on Nov. 11, 2021, Americans will be required to completely withdraw from the securities of blacklisted Chinese companies with a Chinese military background.
“Today’s executive order ensures that the United States retains a key tool to protect U.S. investors from funding China’s (Communist Party of China) military modernization,” a senior administration official told Reuters.
The Trump administration has long argued that U.S. investments in Chinese companies that support the development of the Communist Party’s military would support the expansion of the Communist Party’s military.
The new executive order further expands the scope of the November executive order, while providing greater clarity on the authority of the Treasury and Defense departments to implement the executive order.
The new regulations state that the Secretary of Defense, in consultation with the Secretary of the Treasury, may list a CCP military company that meets the criteria to be sanctioned, regardless of whether the Secretary of Defense provides a report on the matter, until the Secretary of Defense removes the company from the list.
The sanctions will not end until the Secretary of the Treasury determines that a CCP military company or its subsidiary no longer meets the criteria and is removed from the list.
Last November’s executive order requires that beginning at 9:30 a.m. EST on January 11, 2021, the U.S. government prohibit companies or individuals from beginning to purchase or invest in emerging market funds that include such CCP military companies; it also requires investors to withdraw any investments that include these Chinese securities by 11:59 p.m. EST on November 11, 2021.
In addition, the executive order gives teeth to a 1999 law that authorizes the Defense Department to draw up a list of Chinese companies that it believes are owned or controlled by the Communist Party’s military. To date, the Defense Department has blacklisted 35 Chinese companies, including China’s largest chipmaker, SMIC, and oil giant CNOOC.
The November executive order prohibits U.S. companies and individuals, either directly or through funds, from holding Chinese companies blacklisted by the Defense Department that promote the modernization of the Chinese Communist Party’s military. These companies help the Chinese Communist Party military gain access to advanced technology and expertise, as well as promote the Communist Party military’s global military expansion ambitions.
Trump is already further cementing his hard-line policy toward China before he leaves office. on Jan. 5, Trump signed an executive order to ban eight Chinese software applications, including Alipay and Tencent qq.
But Reuters and other media reported earlier on Wednesday that the Trump administration was preparing to withdraw plans to blacklist tech giants Alibaba, Baidu and Tencent.
The Chinese Communist Party embassy in Washington did not immediately respond to a request for comment.
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