The Trump administration issued an executive order on Thursday afternoon prohibiting Americans from making an investment in Chinese corporations other than the Chinese military, to a degree that further exacerbates major tensions between the world’s two largest economies.
The executive order explicitly prohibits anyone in the United States from making investments in Chinese corporations through the Trump administration to be owned or controlled through the Chinese military.
The order comes into force on January 11 and targets 31 known through the Ministry of Defense as “Chinese Communist Army companies” in June and August.
The list includes well-known smartphone manufacturer Huawei, as well as China Telecom Corp and China Mobil, which are listed on the New York Stock Exchange with market capitalizations of approximately $29 billion and $106 billion, respectively.
President Trump’s order also prohibits U. S. investors from owning or trading derivatives of those corporations, or even being exposed to them, that investments in the pension budget or the publicly traded budget with shares of prohibited corporations are also prohibited.
The president declared a national emergency to facilitate order, saying China “forces Chinese civilian corporations to carry out their military and intelligence activities,” which constitutes an “unusual and ordinary threat” to national security.
A White House spokesman did not respond to Forbes’ request for comment.
The 31 corporations known through the Department of Defense as owned or controlled by the Chinese military “raise capital by promoting securities among US investors listed on public exchanges at home and abroad, putting pressure on index providers and to the budget of the United States to include those securities in market offerings, and to participate in other acts to secure American capital. ” Array says the decree: “In this way, the [People’s Republic of China] is exploiting American investors to finance the progression and modernization of its military. “
The Trump administration has taken massive steps to suppress perceived espionage threats through Chinese multinationals. In 2019, the Department of Justice accused Huawei of allegedly using secrets from T-Mobile’s lending industry, and in February imposed more fees on the conglomerate for alleged organized crime. In June, the FCC said Huawei and China-based telecoms giant ZTE posed threats to national security to a extent that prevented U. S. cell phone corporations from doing business with either corporation. , which argues that it does not pose a threat to US security. USA, it is also prohibited on cellular networks in the UK for security reasons.
Shares of China Mobile and China Telecom listed in the United States fell by 4% and 5%, respectively, on Thursday after the executive order was announced.
Exclusive: Trump administration prepares crackdown on U. S. investment in China: resources (Reuters)
Trump prevents Americans from investing in corporations that help China’s military (WSJ)
I’m a journalist at Forbes and I’m in business with markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I did a double degree in business journalism.
I’m a journalist at Forbes and I specialize in markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I earned a double degree in business journalism and economics while applying for UNC Kenan-Flagler Business School as a marketing and communications specialist. Prior to Forbes, I spent a summer reporting on los Angeles’ personal sector for the Los Angeles Business Journal and writing about North Carolina’s publicly traded corporations for NC Business News Wire. Contact jponciano@forbes. com.