As tensions between China and the U.S. continue, the Biden administration may continue the Trump-era restrictions on companies involved in “Chinese Communist Party military affiliations,” which runs counter to Wall Street’s expectations for easing restrictions, according to sources familiar with the matter.
After the news broke, some large Chinese companies’ ADRs were soft, with Alibaba’s ADR closing down 1.7% and Tencent’s ADR down 1.8% from Hong Kong.
Reports indicate that Biden is trying to keep tensions between the U.S. and Beijing at bay as the situation heats up over trade, human rights and the South China Sea. Sources close to the matter said Biden’s team officials are holding preliminary discussions on a ban on investments in “companies linked to the Chinese Communist Party military,” covering China’s three largest telecom companies, but no decision has been made yet.
Although Wall Street is not happy about it, Biden is reportedly likely to get broad support in Congress and take a tough stance against the Chinese Communist Party. Industry sources note that parts of Wall Street’s financial sector have urged the Biden administration to withdraw the investment ban altogether or want to seek clear guidance from the Office of Foreign Assets Control (OFAC) on compliance with the ban.
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