Trump administration recently published an executive order which bans U.S. investments in Chinese firms that are owned or controlled by the Chinese military.
According to Reuters, the order prohibits Americans from buying or holding stock in 31 Chinese companies.
Among others, featured on the banned list are:
- The world’s largest commercial shipbuilder and China’s primary naval shipbuilder, China State Shipbuilding Corporation (CSSC).
- The world’s largest port construction and dredging company, China Communications Construction Corporation (CCCC)
- The Chinese telecom equipment firm Huawei, which has attracted American scrutiny over alleged security risks in its cellular communications equipment.
Namely, the the order will start on January 2021 and will further prohibit purchases by U.S. investors of the securities of those companies.
As the executive order stated:
Any transaction in publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of any Communist Chinese military company as defined in section 4(a)(i) of this order, by any United States person, are prohibited.
However, investors have until November next year, in order to get rid of their holdings in these 31 companies. Concluding, the executive order described China’s military-industrial complex as an “unusual and extraordinary threat” to the US.
