The Trump administration Thursday announced an executive order prohibiting U.S. investment in Chinese firms that Washington says are owned or controlled by the Chinese military, ramping up pressure on Beijing after the U.S. election.
The order could impact some of China's biggest companies, including telecom firms China Telecom Corp. Ltd., China Mobile Ltd. and surveillance equipment-maker Hikvision.
The move is designed to deter U.S. investment firms, pension funds and others from buying and selling shares of 31 Chinese companies that were designated by the Defense Department as backed by the Chinese military earlier this year.
Starting January 11, the order will prohibit any transaction by U.S. investors in the securities of those companies. It also bans Americans from buying and selling securities in a Chinese company beginning 60 days after it is designated as a Chinese military company.
"China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence and other security apparatuses," said the order released by the White House.
The move is the first major policy initiative by President Donald Trump since losing the November 3 election to the projected winner, 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 focused on challenging the election result.
Biden has won enough of the battleground states to surpass the 270 electoral votes needed in the state-by-state Electoral College that determines the next president, but Trump has 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 indications are that he will continue a tough approach to Beijing, with whom Trump has become increasingly confrontational.
The executive order takes a page from a bill, filed by Republican Senator Marco Rubio last month, to block access to U.S. capital markets for Chinese companies that have been blacklisted by Washington.
It is part of a growing effort by Congress and the administration to thwart Chinese companies that enjoy the backing of U.S. investors but do not comply with U.S. rules.
In August, U.S. Securities and Exchange Commission and Treasury officials urged Trump to delist Chinese companies that trade on U.S. exchanges and fail to meet auditing requirements by January 2022.