US bans Investments to firms with Chinese Military links

By Rahul Vaimal, Associate Editor
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US President Mr. Donald Trump has signed an executive order to restrict American firms from investing in China-based companies that are regarded to be owned or controlled by the Chinese military. 

The order is likely to impact U.S. investment firms, pension funds and others from buying a stake in 31 Chinese companies which are deemed by the Defense Department to be backed by the Chinese military. The move will adversely impact several high-profile Chinese firms including surveillance equipment maker Hikvision, China Telecom Corp Ltd, and China Mobile Ltd.

The order which is set to become effective from January 11, 2021, will allow U.S. investors to transact until Nov. 11, 2021, as long as those deals lead to divesting from those 31 firms.

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

Mr. Peter Navarro, a trade adviser for the Trump administration estimated that at least half a trillion dollars in market capitalization was represented by the Chinese companies and their subsidiaries.

“This is a sweeping order designed to choke off American capital to China’s militarization,” Mr. Navarro told media during an interaction.

The latest move by the Trump administration is expected to further deteriorate an already strained relationship among the world’s top two economies.

Earlier, short-video-sharing app TikTok owned by China-based ByteDance got a much-needed boost as the US Department of Commerce withdrew from enforcing a ban on the app.