Biden Expands Trump’s Investment Ban on Chinese Firms

President Joe Biden’s latest executive order has expanded a ban on investing in Chinese companies with alleged links to defense or surveillance technology sectors that was introduced by former president Donald Trump.

The Trump administration issued an executive order on November 12, 2020, barring US entities from investing in a clutch of PRC companies including smartphone-maker Huawei, China Telecommunications Corp., China Unicom Ltd., and China Mobile Communications Group Co.

On Thursday, Biden signed an order blocking Americans from investing in 59 companies based in the People’s Republic of China, including leading microchip-maker Semiconductor Manufacturing International Corp. and the republic’s biggest server manufacturer, Inspur.

Defense companies that made it onto Biden’s list included Aviation Industry Corp. of China, Ltd., China North Industries Group Corp., China Aerospace Science and Industry Corporation Ltd., and China Shipbuilding Industry Co.

In 2019, Biden declared that the Chinese were “not bad folks” and that China, which has the world’s second largest economy, was “not competition for us.”

In the executive order signed yesterday, Biden wrote that “additional steps are necessary to address the national emergency declared in Executive Order 13959 of November 12, 2020 (Addressing the Threat From Securities Investments That Finance Communist Chinese Military Companies), including the threat posed by the military-industrial complex of the People’s Republic of China (PRC) and its involvement in military, intelligence, and security research and development programs, and weapons and related equipment production under the PRC’s Military-Civil Fusion strategy. 

“In addition, I find that the use of Chinese surveillance technology outside the PRC and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats, which have their source in whole or substantial part outside the United States, to the national security, foreign policy, and economy of the United States, and I hereby expand the scope of the national emergency declared in Executive Order 13959 to address those threats.” 

The prohibitions will take effect on August 2, 2021. The US Treasury Department has said it will update the list of barred companies on a “rolling basis” and that they “fully expect” to add more companies to it in the months ahead.