Chinese J-15 fighter jets on the deck of the Liaoning aircraft carrier during military exercises in the South China Sea.
STR | AFP | Getty Images
The Trump administration on Monday strengthened an executive order banning U.S. investors from buying securities of suspected Chinese military-controlled companies after U.S. authorities disagreed on how difficult it is to enforce the directive.
The Treasury Department issued guidance to clarify the November Implementing Regulation that will apply to exchange-traded funds and index funds, as well as subsidiaries of Chinese companies owned or controlled by the Chinese military.
The “Frequently Asked Questions,” posted on the Treasury website Monday, came after Reuters and other news outlets reported that a debate was raging within the Trump administration over the guidelines. The State Department and Defense Department had opposed an offer from the Treasury Department to water down the executive order, a source said.
In particular, some media reported that the Treasury Department attempted to exclude the subsidiaries of Chinese companies from the scope of the White House policy, which from November 2021 prohibits new acquisitions of securities by 35 Chinese companies that Washington claims are backed by the Chinese military.
The guidelines released on Monday stipulate that the bans will apply to “any subsidiary of a Chinese communist military company after that subsidiary is listed by the Treasury Department.” It added that the agency “intends to list public companies” that are 50% or more owned or controlled by a Chinese military company.
The list of designated companies, mandated by a 1999 law, currently includes 35 companies, including oil company CNOOC Ltd and China’s leading chip maker Semiconductor Manufacturing International.