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US Treasury extends China investment ban to subsidiaries

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
This photo taken on November 30, 2020 shows a woman looking at her phone as she attends a training session to get retirees up to speed with digital devices at the Xiaojiahe University of Old Age in Chengdu, the capital of China's Sichuan province. (Photo by AFP)

The US Treasury Department has published an addendum to an executive order by President Donald Trump clarifying which Chinese company stocks Americans were prohibited to purchase.

Last month, Trump signed an executive order sanctioning Chinese firms and institutions with alleged ties to the China’s military.

In an addendum to Trump's executive order included in a set of frequently asked questions posted to the US Treasury Department's website on Monday, it clarified that the investment ban would apply to “any subsidiary of a Communist Chinese military company”.

US citizens were barred from investing in companies "50 percent or more owned by one or more Communist Chinese military company(ies)" or thought to be "controlled by one or more Communist Chinese military company(ies)." it said.


The Treasury department added that it planned to publicly list the name of the subsidiaries subject to the ban that were “50 per cent or more owned” or “determined to be controlled” by the companies with alleged ties to the Chinese military.

It also said the US defense or Treasury secretaries could determine if “an entity, including a subsidiary” was allegedly a “Communist Chinese military company operating directly or indirectly in the US”, which would make it also subject to the investment ban.

The Treasury department noted that exchange traded funds and index funds would be subject to the ban, as well.

Earlier reports said the US Treasury department had sought to exclude subsidiaries from the investment ban but the attempt was rejected by the US State department and the Pentagon.

US Secretary of State Mike Pompeo quickly expressed his satisfaction with the Treasury's new move.

“President @realDonaldTrump is protecting US investors and pension funds. His Executive Order prohibits ETF and index fund investments in Communist Chinese military companies and subsidiaries. Great teamwork on today’s announcement,” Pompeo wrote on Twitter.

In recent weeks, the Trump administration has slapped sanctions on dozens of Chinese companies, including Semiconductor Manufacturing International Corp, China’s largest chipmaker, and drone maker DJI, 

The move against Chinese companies with alleged military links comes after the Trump administration considered a range of moves targeting China.

Meanwhile, China's foreign ministry sharply condemned the move, calling it an abuse of power.

“Politicizing economy and trade, abusing the power of the state, stretching the concept of national security, such actions go against the principles of market competition and international trade that the United States has always prided itself with,” read a statement by China's foreign ministry.

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