US-China tech war: Biden cuts two Huawei financing arms off from US investor access as fight moves to capital markets
- Analysts say move demonstrates Washington’s determination to use financial weapons against Chinese companies it deems a national security threat
- Huawei’s offshore bonds are held by many big financial firms, including large asset management funds
In an executive order published by the White House on Thursday, Biden expanded a list that prohibits Americans from investing in Chinese companies that the administration says have ties to the Chinese military or sell surveillance technology used against religious minorities and dissidents. Investors can no longer buy new securities in these companies on American markets starting from August 2, and existing US investors have been given a year to divest their holdings.
Among the 11 newly-added entities were Proven Glory Capital Ltd and Proven Honour Capital Ltd, two dollar bond issuers for Huawei. According to filings on the Hong Kong stock exchange in November 2020, Meng Wanzhou, a daughter of Huawei founder Ren Zhengfei, was a director of both funds. Meng is currently under house arrest in Canada, awaiting a court ruling over an extradition request from the US.
Analysts said the inclusion of the two Huawei financing arms on the investment ban list, which also includes China’s three state telecoms carriers, demonstrates Washington’s willingness to continue wielding financial weapons against Chinese companies it deems a national security threat.
“This indicates that the US government is becoming more comfortable with imposing capital markets sanctions and using this type of economic leverage to counter China from a national security angle,” said Claire Chu, a senior analyst at Washington DC-based risk-assessment firm RWR Advisory.