U.S President Donald Trump has issued an executive order that bans American companies from investing in Chinese companies linked to or controlled by the Chinese military.
This was disclosed by Reuters on Friday and is expected to have an impact on tech companies majorly owned by the Chinese government including Telecom Corp Ltd, China Mobile Ltd and Hikvision.
The order, which goes into effect from the 11th of Janury 2021, prevents American investment funds, Pensions funds and many others from “buying shares of 31 Chinese companies that were designated by the Defense Department as backed by the Chinese military earlier this year.”
American companies will be permitted to make transactions to divest ownership from the banned companies until November 2021.
“China is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses,” the White House said.
Trade Adviser to the White House, Peter Navarro, said the rule would prevent American money from arming China and estimates half a trillion dollars in market capitalization was represented by the Chinese companies and their subsidiaries.
“This is a sweeping order designed to choke off American capital to China’s militarization,” he said.
Some companies affected by the order reported low shares at the stock exchanges, as China Telecom reported that the order would have a negative impact on it share price and it would monitor developments closely. Its shares were down 7.8% in Hong Kong.