Joe Biden Announces Ban On U.S Investments In 59 Chinese Companies With Either Links To PRC Military Or Selling Surveillance Tech

Signalling continuity with hawkish approach adopted by his predecessor Donald Trump, that U.S President Joe Biden issued an executive order on Thursday (Jun 3) banning Americans from investing in several Chinese companies with close ties to the Chinese military or those selling surveillance technology to to "facilitate repression or serious human rights abuses".

The executive order while prohibit investment in in 59 Chinese companies including telecom behemoth Huawei and largest chipmaker Semiconductor Manufacturing International Corp. (SMIC)

The list also includes China General Nuclear Power Corp and plastic pipe maker Aerosun Corp.

The ban will take effect on Aug 2.

The executive order prohibits Americans from engaging in the purchase or sale of any publicly traded securities of the 59 blacklisted companies. They are also banned from investing in funds that contain Chinese securities in their portfolios.

The order provides one-year period for Americans already invested in the firms—either directly or via mutual and index or other funds—to divest themselves.

"This E.O. allows the United States to prohibit – in a targeted and scoped manner – U.S. investments in Chinese companies that undermine the security or democratic values of the United States and our allies." a White House statement said.

The executive order by Biden administration is viewed as an attempt to prevent U.S. capital from flowing into the PRC’s defense and related materiel sector, including companies that support the PRC’s military, intelligence, and other security research and development programs.

The previous Trump administration frequently used the entity list to target Chinese industries, from telecoms equipment giants Huawei Technologies and ZTE over sanction violations, to surveillance camera maker Hikvision over suppression of China's Uighur minority.

The U.S blacklisted 24 Chinese companies and targeted individuals claiming that they were part of construction and military actions in the South China Sea.

SMIC is China’s largest contract chip manufacturer and could jeopardise China’s long-standing ambitions to become self-reliant on critical technologies. U.S administration holds a view that SMIC is deeply embedded in military projects and is helping China’s defense infrastructure.

In Oct 2019, U.S announced that it was blocking a group of leading Chinese technology companies from buying US-made goods on the grounds of complicity in perpetrating human rights abuses in Xinjiang province of China.

The US Commerce Department said that the entities were targeted over their role in the “brutal suppression” of Uygur Muslims and other Muslim minorities in Xinjiang province.. China has been accused of detaining more than a million ethnic Uygurs in state run ‘concentration camps’

The expanded blacklist released by US Commerce Department in Oct 2019 included 20 local public security bureaus in Xinjiang and eight technology majors, including Hikvision and Zhejiang Dahua Technology, two of the world’s largest manufacturers of video surveillance products.

The list also included leaders in facial recognition technology, SenseTime Group and Megvii Technology, as well as other companies that specialise in voice recognition and data – iFlytek, Xiamen Meiya Pico Information and Yixin Science and Technology.

Chinese Firms blacklisted by Biden's executive order

Aero Engine Corporation of China; Aerospace CH UAV Co., Ltd; Aerospace Communications Holdings Group Company Limited; Aerosun Corporation; Anhui Greatwall Military Industry Company Limited; Aviation Industry Corporation of China, Ltd.; AVIC Aviation High-Technology Company Limited; AVIC Heavy Machinery Company Limited; AVIC Jonhon Optronic Technology Co., Ltd.; AVIC Shenyang Aircraft Company Limited; AVIC Xi’An Aircraft Industry Group Company Ltd.; Changsha Jingjia Microelectronics Company Limited China Academy of Launch Vehicle Technology; China Aerospace Science and Industry Corporation Limited; China Aerospace Science and Technology Corporation; China Aerospace Times Electronics Co., Ltd; China Avionics Systems Company Limited; China Communications Construction Company Limited; China Electronics Technology Group Corporation; China General Nuclear Power Corporation; China Marine Information Electronics Company Limited; China Mobile Communications Group Co., Ltd.; China National Nuclear Corporation; China National Offshore Oil Corporation; China North Industries Group Corporation Limited; China Nuclear Engineering Corporation Limited; China Railway Construction Corporation Limited; China Satellite Communications Co., Ltd.; China Shipbuilding Industry Company Limited; China Shipbuilding Industry Group Power Company Limited; China South Industries Group Corporation; China Spacesat Co., Ltd.; China State Shipbuilding Corporation Limited; China Telecommunications Corporation; China United Network Communications Group Co., Ltd.; Costar Group Co., Ltd.; CSSC Offshore & Marine Engineering (Group) Company Limited; Fujian Torch Electron Technology Co., Ltd.; Guizhou Space Appliance Co., Ltd; Hangzhou Hikvision Digital Technology Co., Ltd.; Huawei Technologies Co., Ltd.; Inner Mongolia First Machinery Group Co., Ltd.; Inspur Group Co., Ltd.; Jiangxi Hongdu Aviation Industry Co., Ltd.; Nanjing Panda Electronics Company Limited; North Navigation Control Technology Co., Ltd.; Panda Electronics Group Co., Ltd.; Semiconductor Manufacturing International Corporation; Shaanxi Zhongtian Rocket Technology Company Limited; and Zhonghang Electronic Measuring Instruments Company Limited.

Surveillance Technology Sector of the Economy of the PRC:
Hangzhou Hikvision Digital Technology Co., Ltd. and Huawei Technologies Co., Ltd.

Others
China Communications Construction Group (Limited); China Electronics Corporation; China Mobile Limited; China Telecom Corporation Limited; China Unicom (Hong Kong) Limited; CNOOC Limited; Huawei Investment & Holding Co., Ltd.; Panda Electronics Group Co., Ltd.; Proven Glory Capital Limited; and Proven Honour Capital Limited.