Trump doubles down on ban

The Trump administration has strengthened an executive order barring US investors from buying securities of alleged Chinese military-controlled companies, following disagreement among US agencies about how tough to make the directive.

The US Treasury Department on Monday published guidance clarifying that the executive order, released in November, would apply to investors in exchange-traded funds and index funds as well as subsidiaries of Chinese companies designated as owned or controlled by the Chinese military.

The "frequently asked questions" release, posted on the Treasury website on Monday, came after news outlets reported that a debate was raging within the Trump administration over the guidance.

The state department and the department of defense had pushed back against a bid by treasury department to water down the executive order, a source said.

Secretary of State Mike Pompeo said that the announcement "ensures US capital does not contribute to the development and modernization of China's military, intelligence, and security services."

Beijing said yesterday China is firmly opposed to the "smearing of China's military-civilian integration strategy."

"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 on," the foreign ministry said.

The guidance specifies that the prohibitions apply to "any subsidiary of a Communist Chinese military company, after such subsidiary is publicly listed by the treasury."

It added that the agency "intends to list" publicly traded entities that are 50 percent or more owned by a Chinese military company or controlled by one.

The November executive order sought to give teeth to a 1999 law that mandated that the department of defense compile a list of Chinese military companies.

The Pentagon, which only complied with the mandate this year, has so far designated 35 companies, including oil company CNOOC and China's top chipmaker, Semiconductor Manufacturing.

Since the November order, index providers have already begun shedding some of the designated companies from their indexes.

Reuters