China Telecom among firms hit by latest Trump twist

China Telecom will be hit by a move to ban US investments in firms the Trump administration says are owned or controlled by the Chinese military

by Jon Macaskill
China Telecom among firms hit by latest Trump twist
President Trump will take further shots at China before he says farewell. File photo by AFP.

(ATF) The Trump administration on November 12 issued an executive order prohibiting US investments in Chinese firms that Washington says are owned or controlled by the Chinese military, ramping up pressure on Beijing after the US election.

President Trump still refuses to concede to the election and retains the right to issue executive orders until the expected transition to a Biden presidency in late January.

The order on investments, which was first reported by Reuters, could impact some of China’s biggest companies, including telecoms firms China Telecom Corp, China Mobile and surveillance equipment maker Hikvision.

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The move is designed to deter US investment firms, pension funds and others from buying and selling shares of 31 Chinese companies that were designated by the Defense Department as backed by the Chinese military earlier this year.

Starting January 11, the order will prohibit any transaction by US investors in the securities of those companies. It also bans Americans from buying and selling securities in a Chinese company 60 days after it is designated as a Chinese military company.

“China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses,” the order released by the White House said.

The move is the first major policy initiative by President Trump since losing the November 3 election to Democratic rival Joe Biden and indicates that he is seeking to take advantage of the waning months of his administration to crack down on China, even as he has appeared focused on challenging the election result.

Thursday’s action is likely to further weigh on ties between the world’s top two economies, which are at loggerheads over China’s handling of the coronavirus pandemic and its move to impose security legislation on Hong Kong.

Biden has not laid out a detailed China strategy but all the indications are that he will continue a tough approach to Beijing.

The executive order takes a page from a bill, filed by Republican Senator Marco Rubio last month, to block access to US capital markets for Chinese companies that have been blacklisted by Washington.

It is part of a growing effort by Congress and the administration to thwart Chinese companies that enjoy the backing of US investors but do not comply with US rules faced by American rivals.

In August, US Securities and Exchange Commission and Treasury officials urged Trump to delist Chinese companies that trade on US exchanges and fail to meet its auditing requirements by January 2022.

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