On Thursday, President Joe Biden signed an executive order that bans Americans from investing in Chinese firms with ties to China’s military-industrial complex. There are now 59 total Chinese companies barred from receiving American investment, and the President’s executive order demonstrates how his administration is carrying on some of former President Donald Trump’s strict China policies.
Biden said the order prohibits American investment from supporting Chinese military, intelligence, and security research and development programs. He said, “I find that the use of Chinese surveillance technology outside the PRC and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats.”
Many of the newly banned firms are affiliated with big state-owned companies and other companies that were previously blacklisted. And according to a Washington senior official, the administration will be adding to the list of blacklisted companies in the coming months. Some of the major Chinese companies currently on the blacklist include Huawei Technologies, Semiconductor Manufacturing International Corporation, and Aviation Industry Corporation of China.
While the new list added roughly ten publicly traded Chinese businesses in total, it didn’t surprise investors who wanted to see if they needed to sell any more Chinese stocks and bonds.
Biden’s action is part of a bigger strategy to confront China as the relationship between the world’s two largest economies turns sour. The strategy includes strengthening U.S. allies and making substantial domestic investments to boost America’s economic edge. It’ll be interesting to see how the relationship between the two nations continues to develop.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.