The US government has delayed a ban on US investors acquiring shares in listed Chinese firms with alleged links to the Chinese military, the People’s Liberation Army (PLA). The US Treasury said in a statement on 26 January that the ban, which was originally intended to be implemented from this month, had now been postponed to late May.
The statement said that all US transactions involving publicly traded securities of “Communist Chinese military companies” or those operating under a “closely matching name” were allowed to progress until 27 May 2021. The original directive – named Executive Order 13959 – was issued by the Donald Trump administration in November 2020.
The White House at that time said the order was designed to address China’s ‘civil-military fusion’ (MCF) strategy to leverage commercial technologies and investments for military gains. Accordingly, the order bans purchases by US investors of publicly traded securities issued by Chinese companies that the US government has determined are linked to the PLA or China’s military-industrial complex. It also prohibits US investments in derivatives “designed to provide investment exposure to such securities” owned by such Chinese firms.
Accompanying the order, the US government has issued a list of 35 Chinese corporations and subsidiaries to which the ban applies. This list includes those normally associated with defence production, such as the Aviation Industry Corporation of China (AVIC), and others that operate primarily in the commercial domain, such as Huawei.
In addition to Executive Order 13959, the Trump administration introduced in late 2020 a new ‘military end-user’ (MEU) list that identified Chinese firms restricted from acquiring sensitive dual-use technologies. The list is also focused on addressing China’s MCF strategy and currently includes 58 Chinese companies, many of which are aerospace firms.
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