Trump administration bolsters order barring US investment in Chinese firms
- Treasury Department clarifies that executive order applies to exchange-traded funds and index funds as well as subsidiaries of companies on its list
- The list currently contains 35 firms, including oil giant CNOOC and China’s top chip maker, SMIC
The Trump administration on Monday strengthened an executive order barring US investors from buying securities of alleged Chinese military-controlled companies, following disagreement among US agencies about how tough to make the directive.
The Treasury Department published guidance clarifying the executive order, released in November, would apply to exchange-traded funds and index funds as well as subsidiaries of Chinese companies designated as owned or controlled by the Chinese military.
The “frequently asked questions” release, posted on the Treasury website on Monday, came after news outlets reported that a debate was raging within the Trump administration over the guidance.
The State Department and the Department of Defence had pushed back against a bid by Treasury Department to water down the executive order, a source said.
Specifically, some media outlets reported that the Treasury was seeking to exclude Chinese companies’ subsidiaries from the scope of the White House directive, which bars new purchases of securities of 35 Chinese companies that Washington alleges are backed by the Chinese military, starting in November 2021.
The guidance released on Monday specifies that the prohibitions apply to “any subsidiary of a Communist Chinese military company, after such subsidiary is publicly listed by Treasury”.
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It added that the agency “intends to list” publicly traded entities that are 50 per cent or more owned by a Chinese military company or controlled by one.
The list of designated companies, which was mandated by a 1999 law, currently contains 35 companies, including oil company CNOOC and China’s top chip maker, Semiconductor Manufacturing International Corp (SMIC).
