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Biden signed an executive order that bans Americans from investing in dozens of Chinese companies with alleged ties to defense or surveillance technology sectors, in a move that analysts say further complicates Washington’s trade relationship with Beijing.
The U.S. administration said it would expand the scope of a legally flawed Trump-era mandate, in which the U.S. treasury will enforce and update on a “rolling basis” the new list banning investment in 59 companies.
China condemned the move on Friday, accusing the U.S. of “overextending the concept of national security and abusing its national power." Wang Wenbin, the foreign ministry spokesperson, said: "China urges the U.S. to respect market rules and principles and rescind the so-called list that suppresses Chinese companies."
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Washington’s latest decision came on the same day that China’s commerce ministry stated that the two countries resumed “normal communication," following recent high-level encounters between the two countries' trade and financial officials.
This week, China’s vice-premier Liu He held calls with U.S. trade representative Katherine Tai and US treasury secretary Janet Yellen. At the same time, China's commerce ministry said both sides exchanged “candid” views on various issues.
Experts said, however, that Washington’s latest move could further complicate the bilateral relationship.
The order explicitly prevents U.S. investment in Chinese military, intelligence and security research and development programs.
“In addition, I find that the use of Chinese surveillance technology outside [China] and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats,” Biden said.
A White House fact sheet said the policy would take effect for the companies listed on August 2nd.
Hong Kong stocks extend losses in week as Biden widens investment ban on Chinese military-linked companies https://t.co/RcgGmnTNuL
— SCMP News (@SCMPNews) June 4, 2021
Major Chinese firms included on the previous Defense department list were also placed on the updated list, including Aviation Industry Corp of China (AVIC), China Mobile Communications Group, China National Offshore Oil Corp (CNOOC), Hangzhou Hikvision Digital Technology, Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC), the last of which is key to China’s national drive to boost its domestic chip sector.
“We fully expect that in the months ahead…we’ll be adding additional companies to the new executive order’s restrictions,” one of the senior Treasury Department officials said.
A second official told reporters that the inclusion of Chinese surveillance technology companies expanded the scope of Trump's initial order last year, which the White House claims was carelessly drafted, susceptible to court challenges.
Analysts said the move is part of Biden’s broader series of steps to confront China, including reinforcing U.S. regional alliances and pursuing significant domestic investments to bolster American economic competitiveness, amid increasingly tense relations between the world’s two most powerful countries.
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