Trump administration bolsters order barring U.S. funding in Chinese companies

The Trump administration on Monday strengthened an govt order barring U.S. traders from shopping for securities of alleged Chinese military-controlled firms, following disagreement amongst U.S. businesses about how powerful to make the directive.
The Treasury Department revealed steering clarifying that the chief order, launched in November, would apply to traders in exchange-traded funds and index funds in addition to subsidiaries of Chinese firms designated as owned or managed by the Chinese navy.
The “frequently asked questions” launch, posted on the Treasury web site on Monday, got here after Reuters and different information shops reported {that a} debate was raging inside the Trump administration over the steering. The State Department and the Department of Defense had pushed again towards a bid by Treasury Department to water down the chief order, a supply stated.
Secretary of State Mike Pompeo stated Monday that the announcement “ensures U.S. capital does not contribute to the development and modernization of the People’s Republic of China’s (PRC) military, intelligence, and security services.”
“This should allay concerns that U.S. investors might unknowingly support (Chinese military-controlled companies) via direct, indirect, or other passive investments,” he added.
Specifically, some media shops reported that Treasury was searching for to exclude Chinese firms’ subsidiaries from the scope of the White House directive, which bars new purchases of securities of 35 Chinese firms that Washington alleges are backed by the Chinese navy, beginning in November 2021.
The steering launched on Monday specifies that the prohibitions apply to “any subsidiary of a Communist Chinese military company, after such subsidiary is publicly listed by Treasury.” It added that the company “intends to list” publicly traded entities which are 50% or extra owned by a Chinese navy firm or managed by one.”
Treasury’s revealed FAQ represents a transparent victory for the U.S. safety group in its decided effort to protect sturdy capital markets sanctions related to [the executive order] — the primary of their type,” stated Roger Robinson, a former White House official who helps curbing Chinese entry to U.S. traders.
The November govt order sought to provide tooth to a 1999 regulation that mandated that the Department of Defense compile a listing of Chinese navy firms. The Pentagon, which solely complied with the mandate this 12 months, has thus far designated 35 firms, together with oil firm CNOOC Ltd and China’s high chipmaker, Semiconductor Manufacturing International Corp.
Since the November order, index suppliers have already begun shedding among the designated firms from their indexes.