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Trump Strengthens Ban on US Investments in Chinese Military Companies

Trump Strengthens Ban on US Investments in Chinese Military Companies

by John Clore

A year ago




President Donald Trump signed an order late Wednesday requiring U.S. investors to completely divest their holdings of securities of Pentagon-blacklisted Chinese military companies by Nov. 11, 2021.

The amendment order expands the scope of the initial November executive order (E.O.) 13959, which initially only restricted U.S. investors from buying securities of companies designated by the Pentagon as owned or controlled by the Chinese military by Nov, 11, 2021.

“[A]ny transaction entered into on or before 11:59 p.m. eastern standard time on November 11, 2021, solely to divest, in whole or in part, from securities that any United States person held as of 9:30 a.m. eastern standard time on January 11, 2021, in a Communist Chinese military company … is permitted. Effective at 11:59 p.m. eastern standard time on November 11, 2021, possession of any such securities by a United States person is prohibited,” the order reads.

The amendments also prohibit possession of any securities that are owned or controlled by any Pentagon-designated communist Chinese military company one year after a company is determined to be as such.

The amendments also allow the Secretary of Defense “publicly to list whether a company is a Communist Chinese military company using the criteria in section 1237(b)(4)(B) of Public Law 105-261, as amended by section 1233 of Public Law 106-398 and section 1222 of Public Law 108‑375, regardless of whether the Secretary must report that determination under section 1237(b)(2),” Trump wrote in a letter to House Speaker Nancy Pelosi (D-Calif.) and Vice President Mike Pence.

The executive order Trump issued in November (pdf) sought to boost a 1999 law that mandated the Pentagon to compile a list of Chinese military companies. The Pentagon, which began complying with the mandate in 2020, has so far designated 35 companies as Chinese military companies operating directly or indirectly in the United States, including those owned or controlled by the People’s Liberation Army (PLA). Among those listed as such are oil company CNOOC Ltd. and China’s top chipmaker, Semiconductor Manufacturing International Corp.



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