WASHINGTON (CN) — Shifting gears from the election challenges that have otherwise occupied him this week, President Donald Trump issued an executive order that would block U.S. investment in companies considered arms of the Chinese military.
The Thursday directive says the key to China’s developing military is their private economy, which compels Chinese citizens to increase the size of those defenses through “Military-Civil Fusion.” Citizen companies directly support military operations, although they are simultaneously private operations, the order states.
“At the same time, those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying Unite States index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to United States capital,” the order states.
Starting in January 2021, Americans will be prohibited from doing business with Chinese companies like China Telecom Ltd., a state-owned telecommunication company. By November 2021, American investors are expected to completely divest their investments with any company dubbed to be a Chinese military company — a designation to be given by the defense secretary, in consultation with the treasury secretary.
Thirty-one companies to date have been outlawed from doing business with U.S. investors, an increase from the 20 names initially listed by the Defense Department in June. That list included Huawei, a telecommunications company and a large manufacturer of surveillance equipment, which denies being controlled by China’s military.
The Trump administration also slapped sanctions this past August on two dozen Chinese companies accused of constructing more than 3,000 acres of military islands in the South China Sea. More than seven islands have expanded China’s military reach in the region, with construction ongoing since 2013 — a move U.S. officials say violates a 2016 arbitration treaty with the Philippines.
China has faced global pushback over its crackdown on pro-democracy protests in Hong Kong, a territory that had enjoyed special diplomatic status up until recently allowing international trade not possible in mainland China because of its communist control.
Four pro-democratic lawmakers were removed from China’s parliament on Wednesday after the body passed a resolution stating anyone not loyal to the country would be ejected. The remaining 15 members of Hong Kong’s legislative council resigned their positions in protest.
U.S. Secretary of State Mike Pompeo said in a statement Thursday that China’s “twisted vision of patriotism” is an excuse to “stifle freedom and the call for democracy.”
“Beijing has eliminated nearly all of Hong Kong’s promised autonomy, as it neuters democratic processes and legal traditions that have been the bedrock of Hong Kong’s stability and prosperity,” Pompeo said in a statement.