President Biden issued a new executive order on Thursday banning Americans from investing in Chinese companies linked to the country’s military or engaged in the sale of surveillance technology, both inside and outside China, which was used to repress religious or dissident minorities.
The new order, which initially lists 59 Chinese companies, substantially extends an order issued in November by President Donald J. Trump. By rewriting this previous order to include companies dedicated to making and deploying surveillance technology — used against Muslim minorities such as Uighurs and dissidents in Hong Kong and the Chinese diaspora around the world — it intensifies a trade and ideological battle between Beijing and Washington, one that Mr. Biden has called the struggle between “autocracy and democracy.”
The move comes at a time when China is increasing its ability to spy on its nearly 1.4 billion people, through a combination of cameras and facial recognition software, phone scanners and a wide range of tools, and exports this technology to nations. around the world. It is often sold overseas as part of a communications equipment package provided by companies such as Huawei, or as part of the China Road and Belt Initiative, which aims to expand links. of the country.
Biden’s aides said the measure was justified by a new US commitment not to facilitate Chinese repression and human rights abuses.
But China regularly calls for movements such as interference in its internal affairs and, in the past, has tried to retaliate with bans on US companies, leading to fears of widespread economic decoupling between the two economies. largest in the world. And the Chinese are likely to argue that the United States and other countries use some of the same technologies and techniques to track down terrorists and drug lords.
The effectiveness of Mr Biden’s order to stop the spread of Chinese espionage technology is unclear. To make the investment ban really effective, it would have to convince European allies, Japan and South Korea, among others, to join the effort.
This effort may begin next week. How China is handled is expected to be a major issue when Biden attends the Group of 7 summit in Britain next week, followed by a meeting of NATO allies. It will be his first trip abroad as president. But in the run-up to the meeting, it is already meeting the resistance of nations that, like Germany and South Korea, rely on China as one of its main export markets for luxury cars, software and electronics.
As senior government officials described on Thursday, the new order will prohibit U.S. companies and U.S.-based companies from investing in shares of listed Chinese companies or in debt issued by those companies. The ban will extend to investment in funds that, in turn, invest in these companies. These funds will have one year to develop their investments.
The new executive order is yet another example of a case in which the Biden administration is based on a Trump-era Chinese initiative. Biden has also maintained tariffs on Chinese products, as a lever for negotiations. In this case, Biden administration officials say they were acting in part to resolve the executive order issued last November, which they say was drafted and has been successfully challenged in U.S. courts because it did not clearly establish the de facto grounds for banning investments in Chinese companies linked to the defense industry.
Under the new executive order, the list of Chinese companies affected by the ban will be compiled by the Treasury Department, which has long experience in issuing sanctions instead of the Pentagon.