The US Treasury Department on December 28 released a guide to further clarify the executive decree passed by the administration of President Donald Trump since November. The document explains that the decree is applied to the investment in exchange-traded funds and stocks of companies suspected of being involved in the Chinese military.
The move comes after Reuters and other news outlets said a dispute had occurred within the Trump administration over the decree.
Some media reported that the US Treasury Department seeks to remove the subsidiaries of Chinese companies from the scope of the White House decree. The ordinance banning American investors from buying shares in 35 Chinese companies that Washington says is backed by the Chinese military, began in November 2021.
A source said the State Department and the Department of Defense had sought to oppose the Treasury’s efforts to limit the size of the decree.
The US Treasury Department document confirms the ban applies to any subsidiary of companies suspected of being linked to the Chinese military, after the companies were publicly blacklisted by the US Treasury Department.
The US Treasury Department also announced that it plans to make public a list of companies controlled or owned by the Chinese military with 50% or more.
According to CNBC, the goal of the US to prevent investment companies, pension funds and other US companies from buying shares of Chinese companies was put in the “sights” of Washington.
The list of Chinese companies listed on the US blacklist includes 35 units, including China Hai Duong Petroleum Corporation (CNOOC) and the International Semiconductor Manufacturing Company (SMIC). These are businesses that Washington believes are owned or controlled by the Chinese military and that pose a threat to US national security.
SMIC is China’s leading chip maker and heavily relies on equipment imported from US suppliers. In September 2020, the US Department of Commerce issued a notice requiring businesses of this country to apply for a license before providing goods and services to SMIC.
Meanwhile, American investors currently hold about 16.5% shares of CNOOC. CNOOC currently owns a number of oil and gas fields in the US and is cooperating with foreign oil and gas companies like Exxon Mobil on international projects. The US ban is expected to significantly affect CNOOC’s operations.
On December 21, the US Department of Commerce announced sanctions against 58 Chinese and 45 Russian companies, including China Aviation Industry Corporation. These companies will be banned from accessing American technologies.
The inclusion of large Chinese businesses on the blacklist is a tough move for President Donald Trump’s administration in Beijing in the final weeks of his term. The US House of Representatives on December 2 also passed a bill that allows delisting any Chinese business that does not comply with the US auditing regulations.