Trump Bans US Investments in Companies Linked to Chinese Military

President Donald Trump signed an executive order banning U.S. investments in firms that the administration says are owned or controlled by the Chinese military.

According to a CNBC report, Trump seeks to prohibit American companies and individuals from owning and selling shares that may help in the advancement of the Chinese military.

The companies covered by Trump's order were designated by the Defense Department earlier this year.

The executive order, first reported by Reuters, affects 31 Chinese companies that "enable the development and modernization" of the Chinese military or "directly threaten" the security of the U.S.

It will affect telecoms firms like China Telecom Corp Ltd and China Mobile Ltd. CNN also noted in its report that Smartphone maker Huawei and surveillance equipment maker Hikivision were blacklisted.

In the order, Trump said the People's Republic of China (PRC) is "increasingly exploiting United States capital to resource" to advance its military, intelligence, and other security apparatuses.

Through these investments, the PRC can "directly threaten the United States homeland and United States forces overseas," continued the order.

He said the investments might be used to develop and deploy weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions against the U.S.

Pension Funds also Banned by Trump

The order will also ban U.S. investors from trade securities that originate or are exposed to said Chinese firms. Under this, pension funds will also be banned.

Investors will have one year to divest from any of the companies affected by the ban, but the ban will take effect starting 9:30 a.m. on January 11, 2021. It adds up to the heated trade and technology battles between the world's largest economies.

The Chinese embassy in Washington did not immediately give comment to Reuters on the said ban order.

Former vice president Joe Biden, who was projected by major news networks as the winner of the latest election, did not respond to a request for comment on the order.

His strategy on China has not yet been laid out, but it is believed he will continue Trump's approach to Beijing if he took the White House seat.

Trump has also been increasingly confrontational with China in the past years.

More Drastic Measures on Chinese Military Ambitions

The Trump administration received months of warnings from its security and economic teams regarding measures on Chinese military ambitions.

America's exposure to the said efforts could be more drastic, said the national teams.

According to Peter Navarro, White House trade adviser, there are at least half a trillion dollars in market capitalization from Chinese companies and their subsidiaries.

"This is a sweeping order designed to choke off American capital to China's militarization," he said.

The order is Trump's first major policy move since the elections and it signals how much he wants to take advantage of the next few months to crack down on China.

The order is similar to a bill filed by Republican senator Marco Rubio last month, which seeks to block access to local markets for Chinese companies that were part of the Defense Department's list.