Biden administration delays Chinese military-related investment ban

The new US government has delayed a Trump-era executive order by four months

Under new President Joe Biden, the US Treasury has paused the implementation of a Trump-era executive order that banned US companies from investing in certain Chinese firms.

The order, issued in November, banned American companies from trading in certain firms, or those with similar names; for example, China Mobile Limited, China Unicom Limited and China Telecom Corporation Limited.

The US government suspects the blacklisted firms to be owned or controlled by the Chinese military.

Mr Trump's executive order set the 11^th January as a deadline for the ban to take effect.

However, the language of the executive order was confusing for investors, who said it lacked clear guidance on specific companies covered by the ban. This meant that investors faced the task of having to scour hundreds of companies that could be possible targets of new sanctions.

The industry quickly communicated the issue to The Treasury's Office of Foreign Assets Control (Ofac) and the government, which then issued a general licence, pushing the deadline from the 11^th January to the 28^th January.

On Wednesday, the Biden administration said that it was extending the deadline further, to 27th May 2021 [pdf]. The decision means that the new team at the White House has about four months to work out exactly which Chinese firms should be banned, and which deserve a pass.

The Ofac also issued a "general licence" to grant the extension.

The move comes as the Biden administration has started to review Trump's China-related policies, including bans on dozens of Chinese firms in the past two years.

The new administration is expected to take a few months to decide which measures need to be kept and which it should reverse or amend.

The US government tightened restrictions on Chinese tech giant Huawei in May last year, banning suppliers of software and manufacturing equipment worldwide from using American technology to manufacture components for the Chinese company without first obtaining a government license.

In August, the Trump government added 38 Huawei affiliates to its 'Entity List' of companies, which it said posed threats to the national security. The companies included in the ‘Entity List' are prohibited from receiving sensitive technologies from US firms.

About one month later, the government told American chip makers that they had to obtain individual licenses before selling certain technology to Semiconductor Manufacturing International Corporation (SMIC) - the largest silicon chip maker in China.

The government said there was a risk that the Chinese government could use technologies supplied to SMIC or its subsidiaries for military purposes.