President Joe Biden signed an order on Thursday revising his predecessor’s restriction on US investment in Chinese enterprises, citing 59 companies with ties to China’s military or the surveillance business, including Huawei Technologies Co. and the country’s three largest telecommunications businesses.
According to administration officials who briefed reporters on the condition of anonymity, the new investment ban will go into effect on Aug. 2 at 12:01 a.m. in New York. Investors will have one year to complete their divestiture.
Biden’s directive is mainly a continuation of a policy enacted by former President Donald Trump, which was challenged in court and left investors perplexed about the scope of its application to subsidiaries of prohibited businesses.
Wall Street and Capitol Hill have been watching Biden’s reaction to Trump’s directive, as lawmakers from both parties have urged for a tough approach against China on topics ranging from trade to human rights.
Many of the companies listed in Biden’s order were already on the Trump administration’s list, including China Mobile Communications Group Co., China Unicom Ltd., and China Telecommunications Corp., the country’s largest telcos.
Aviation Industry Corp. of China, Ltd., one of the most well-known of China’s military behemoths; China North Industries Group Corp.; China Aerospace Science and Industry Corporation Ltd.; and China Shipbuilding Industry Co. are among the defence corporations on Biden’s list.
On Biden’s list is Hangzhou Hikvision Digital Technology Co., a producer of surveillance cameras and facial-recognition technology that has assisted Chinese authorities on implementing “safe city” schemes in Xinjiang, where ethnic Uyghurs have been persecuted.
Zhonghang Electronic Measuring Instruments Co. and Jiangxi Hongdu Aviation Industry Co. are among the companies on Biden’s list that were not included in Trump’s initial ban.
Proven Honour Capital Ltd., Proven Glory Capital Ltd., Shaanxi Zhongtian Rocket Technology Co., Inner Mongolia First Machinery Group Co., Changsha Jingjia Microelectronics Co., China Avionics Systems Co., China Satellite Communications Co., China-based Costar Group Co., Fujian Torch Electron Technology Co., and Guizhou Space Appliance Co. are among the others.
Later Thursday, the Treasury Department issued instructions on the penalty. According to one of the officials, the list would be updated on a regular basis.
The investment limitations will only apply to subsidiaries of corporations that are identified by the Office of Foreign Assets Control under Biden’s directive.
According to Biden administration officials, the new directive states that the sanctions will no longer apply to companies whose names closely resemble those of the listed firms.
The State and Defense Ministries will collaborate on the OFAC list.
The Pentagon is set to provide more corporate names on Thursday, as required by Congress to retain a list of business related to the Chinese military.
The Pentagon and OFAC will name some corporations, according to the officials.
After two Chinese corporations successfully challenged Trump’s order in a US court, the decree was amended.
According to Biden’s team, a change was required to ensure that it was legally sound and long-term viable.