President Donald Trump signed an executive order Thursday afternoon that will block Americans from investing in companies with ties to the Chinese military.
“Key to the development of the [People’s Republic of China’s] military, intelligence, and other security apparatuses is the country’s large, ostensibly private economy,” the order reads. “Through the national strategy of Military-Civil Fusion, the PRC increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities. Those companies, though remaining ostensibly private and civilian, directly support the PRC’s military, intelligence, and security apparatuses and aid in their development and modernization.”
“At the same time, those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying United States index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to United States capital,” the order added. “In that way, the PRC exploits United States investors to finance the development and modernization of its military.”
The order aims to deprive those companies of capital that could be used to expand China’s military or enhance its intelligence apparatus. The order goes into effect on January 11, 2021, but gives investors until November 11, 2021 to fully divest from any companies currently designated by the Departments of Defense and Treasury to have ties to China’s military.
Furthermore, the order will additionally apply to any companies designated by Defense and Treasury as Chinese military companies in the future, 60 days after the formal designation.
“The President’s action serves to protect American investors from unintentionally providing capital that goes to enhancing the capabilities of the People’s Liberation Army and People’s Republic of China intelligence services, which routinely target American citizens and businesses through cyber operations, and directly threaten the critical infrastructure, economy, and military of America and its allies and partners around the world,” National Security Advisor Robert O’Brien said of Trump’s latest order. “President Trump has no higher priority than the security of the American people.”
Author: Christian Datoc