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Trump bans US investments in firms linked to Chinese military

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WASHINGTON: The Trump administration on Thursday 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 Corp Ltd, China Mobile Ltd and surveillance equipment maker Hikvision.


The move is designed to deter US investment firms, pension funds and others from buying shares of 31 Chinese companies that were designated by the Defence Department as backed by the Chinese military earlier this year.


Starting on January 11, the order will prohibit purchases by US investors of the securities of those companies. Transactions made in order to divest ownership in the companies will be permitted until November 11, 2021.


“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.


White House trade adviser Peter Navarro estimated that at least half a trillion dollars in market capitalisation was represented by the Chinese companies and their subsidiaries.


“This is a sweeping order designed to choke off American capital to China’s militarisation,” he told reporters on a call.


The move is the first major policy initiative by President Donald Trump since losing the November 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 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 will continue a tough approach to Beijing, with whom Trump has become increasingly confrontational in his last year in office.


The order echoes a bill filed by Republican senator Marco Rubio last month which sought to block access to US capital markets for Chinese companies that have been blacklisted by Washington, including those added to the Defence Department list.


“Today’s action by the Trump administration is a welcome start to protecting our markets and investors,” said Rubio, a top congressional China hawk. “We can never put the interests of the Chinese Communist Party and Wall Street above American workers and mom and pop investors.” His comments were echoed by Republican Congressman Jim Banks, who described the order as “one of the wisest and most significant foreign policy decisions President Trump has made since he entered office.” — Reuters


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