US President Donald Trump has signed an executive order banning Americans from investing in Chinese firms deemed to be supplying or supporting Beijing’s military and security apparatus, earning a sharp rebuke from China.
The order listed 31 companies Thursday it said China was using for the “increasing exploitation” of US investment capital to fund military and intelligence services, including the development and deployment of weapons of mass destruction.
US-China relations have deteriorated sharply during Trump’s presidency, and this was the latest in a series of executive orders and regulatory actions that have targeted China’s economic and military expansion.
On Friday, Beijing lashed out at the US for “abusing state power to arbitrarily oppress Chinese companies”, saying the move “severely undermines” trade and investment cooperation between both countries.
Chinese foreign ministry spokesman Wang Wenbin told a regular press briefing that the US should “stop its wrong behaviour” and withdraw its decision.
“This measure not only severely harms the legitimate rights and interests of Chinese companies, it also hurts the interests of international investors including those from the US,” Wang said.
Under his “America First” banner, Trump has portrayed China as the greatest threat to the United States and global democracy, pursued a trade war with it, harangued Chinese tech firms, and laid all the blame for the coronavirus pandemic at Beijing’s door.
Thursday’s order prohibits US companies and individuals owning shares in any of the listed companies, which include major telecommunications, construction and technology firms such as China Mobile, China Telecom, video surveillance firm Hikvision, and China Railway Construction Corp.
Current investors will have a year to divest from the Beijing-linked companies, according to the order.
News of the move, which will come into effect on January 11, reverberated on the stock market in Hong Kong Friday.
Shares in state-owned China Telecom dropped nearly eight percent, China Mobile fell five percent and China Railway Construction Corp lost more than four percent.
Biden’s Beijing squeeze
National Security Advisor Robert O’Brien said the order would prevent Americans from unknowingly providing passive capital to Chinese companies— listed on exchanges around the world—that support the improvement of Beijing’s army and spy agencies.
He said the companies included on the list “routinely target American citizens and businesses through cyber operations”, as well as its economy and military.
O’Brien also lashed out at Beijing over its removal of four pro-democracy lawmakers in Hong Kong this week, calling the city’s one country, two systems governance a “fig leaf” masking China’s increasingly authoritarian grip on the financial hub.
Since media called the presidential race six days ago, Trump has not conceded to President-elect Joe Biden, as is traditional once a winner is projected.
With Covid-19 cases shattering records across the country and states imposing new restrictions in a push to contain them, Trump seems to have all but shelved normal presidential duties, leaving his final policy moves on China increasingly unpredictable.
Despite the administration’s tough words on China, analysts expect Biden to renew American leadership on human rights, and to more tightly squeeze Beijing on trade and security than his predecessor.
On the campaign trail, the former vice president was outspoken about Beijing’s rights record and Chinese President Xi Jinping, rhetoric that threatens to deepen tensions upon his arrival in the Oval Office in January.
“This is a guy who doesn’t have a democratic — with a small d — bone in his body,” he said in a Democratic primary debate in February. “This is a guy who is a thug.”
Nearly a week after the election was called for Biden, Beijing finally issued a message of congratulations to the president-elect on Friday, with Wang saying China would “respect the choice of the American people. We express our congratulations to Mr. Biden and (Vice president-elect Kamala) Harris.”
Wang said China understood “the result of the US election will be determined in accordance with US laws and procedures”.