Trump administration cracks down on US investments in Chinese firms
- Move targets companies that Washington says are owned or controlled by the Chinese military
- Executive order affects some of China’s biggest firms, including Huawei, China Telecom, China Mobile and Hikvision
More than 210 Chinese firms with a combined market capitalization of about US$2.2 trillion are listed on major US stock exchanges as of October, according to a congressional report by the US-China Economic and Security Review Commission.
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The order would ban US investors from trading securities of Chinese companies designated by the US Defence Department as backed by the Chinese military starting January 11, 2021, and gives investors currently holding them until November 11, 2021 to sell them.
Gabriel Wildau at Teneo Risk Advisory in New York said Trump’s move underscores the heightened risk investors face with regard to China in the final months of the president’s administration. Democrat Joe Biden was called as the winner of the presidential election on November 7, and Trump has yet to concede.
“This action should be a warning to companies and financial markets that the lame duck period will bring elevated risks,” Wildau said. Trump “may be less cautious about taking disruptive actions, since the next administration will be the one to deal with the consequences”.