(ConservativePeak.com)- Americans are now banned from investing in Chinese companies that the Trump administration deems to be controlled or owned by the Chinese military.
On Thursday, President Donald Trump signed an executive order that bans American investment in 31 companies based in China the administration says “enable the development and modernization” of the military in China and “directly threaten” the security of the United States.
Among the companies on the list are Huawei, a smartphone company, and Hikvision, one of the largest manufacturers of video surveillance equipment in the world. Also on the list are China Mobile and China Telecom, which are both listed on the New York Stock Exchange.
The executive order bans any investor in the United States from trading or owning securities that are exposed to or originate from the 31 Chinese firms on the list. Included in that are owning shares in the companies as well as pension funds that include those firms.
While the executive order goes into effect January 11, Americans who are invested in these companies will have some time to divest from them. They’ll have until November of next year to fully divest.
Hikvision’s stock dropped by more than 4% on the Shenzhen market Friday morning following the announcement. In a statement, the company said Trump’s pursuit of their company is “groundless.”
“As we have shown time and again, Hikvision is not a ‘Chinese military company.’ Hikvision is independently operated and publicly traded. These punitive actions against the company do not make America, or the world, any safer,” the statement read.
Other companies affected by the executive order experienced a drop in their stock price Friday. China Telecom dropped 7.8%, while China Mobile dropped 5%. Huawei is a privately-owned firm and isn’t traded on a public stock exchange.
Not surprisingly, China government officials were none too happy with Trump’s latest action. Wang Wenbin, a spokesperson for China’s Ministry of Foreign affairs, says the U.S. government “maliciously slandered” any legitimate collaboration that happened between civilian companies and China’s military and “unreasonably suppressed Chinese companies.”
“This move will not only seriously damage the legitimate interests of Chinese companies, but will also damage the interests of investors in various countries, including the United States.”
Increased attention toward China is not something that’s particularly surprising to many industry observers. Many expect Trump to turn up the heat on China during the lame-duck period of his presidency.
Paul Triolo, who works for the consultancy firm Eurasia Group as its head of geotechnology, said China “will be on guard for the Trump administration to take some hard parting shots at China, particularly actions against major Chinese tech companies.
“But China will generally stay restrained in its retaliatory measures in order not to poison relations before [U.S. president-elect Joe] Biden takes office on 20 January,” he wrote in a note to investors last week.
The Trump administration has consistently targeted Chinese tech companies such as Huawei and social media apps such as TikTok during his administration, and it seems he’s not going to back down just because his time in the White House is coming to an end.