Biden expands Trump’s list of Chinese companies banned from US investment

President Joe Biden has expanded a Trump-era ban on American investment in dozens of Chinese firms that Washington believes are linked to China’s military.

Biden signed an executive order Thursday that prohibits Americans from owning or trading any securities tied to 59 companies, citing the threat of Chinese surveillance technology. The original order, signed by former President Donald Trump in November, applied to 31 Chinese companies that the administration said “enable the development and modernization” of China’s military and “directly threaten” US security.

Biden’s new order goes into effect on August 2.

The Biden announcement largely continues the campaign his predecessor had started against Chinese tech and other businesses.

Many companies that were on Trump’s list — including smartphone maker Huawei and Hikvision, a major manufacturer and suppliers of video surveillance equipment — remain on this one. Some of the country’s biggest telecommunications companies, including China Mobile, China Telecommunications and China Unicom, are also still banned.

The decision to expand the scope of the order is due to the “unusual and extraordinary threats” posed by Chinese surveillance technology, according to the White House, which added that the decision “allows the United States to prohibit — in a targeted and scoped manner — US investments in Chinese companies that undermine the security or democratic values of the United States and our allies.”

China condemned the move at a press briefing on Friday, and said that the US has “unscrupulously suppressed and restricted Chinese companies.”

China “firmly opposes” Washington’s move as one that hurts “not only the legitimate rights and interests of Chinese companies, but also the interests of global investors, including US investors,” said Wang Wenbin, spokesperson for China’s Ministry of Foreign Affairs.

Several of the companies that have been named in both orders have previously dismissed claims that they were tied to the Chinese military as groundless. Xiaomi even successfully lobbied against its inclusion on the Trump-era list, and in May this year the US Department of Defense and the smartphone maker reached an agreement to set aside the ban on the company.

The move from Biden suggests that Washington isn’t rushing to make amends with Beijing. Analysts have previously said that while Biden will likely strike a more predictable and diplomatic tone with China than Trump did, they don’t expect the administration to ease up on tech and trade policy.

The new order “moves the world a step closer to strategic decoupling in the global financial sector,” said Alex Capri, a research fellow at Hinrich Foundation and a visiting senior fellow at National University of Singapore. He added that it “underscores the difficulty that American financial firms are going to have in the future, trying to sort out which of their investments have ties back to the Chinese state.”

Political clashes have already exacerbated tensions between the two countries. A March summit in Alaska between senior US and Chinese officials ended with an unusual diplomatic spat. The two sides have also feuded recently over a handful of issues, including alleged human rights abuses in Xinjiang and the origins of Covid-19.

Even so, the countries are restarting talks on some issues. Beijing said Thursday that it is now having “normal communication” with Washington on trade and the economy, citing recent discussions between Chinese Vice Premier, Liu He, US Trade Representative Katherine Tai, and US Treasury Secretary Janet Yellen as “professional, frank and constructive.”

Doug Fuller, an associate professor at the City University of Hong Kong, said Biden’s move does not necessarily mean the administration will “radically broaden other policies.”

“The overall trend seems to be a fair amount of continuity with the Trump administration’s China policies with neither large rollbacks nor tripling down on sanctions and other controls,” he told CNN Business.

— CNN’s Beijing bureau contributed to this report.