Trump Administration Toughens Ban on Investment in Chinese Military Companies
WASHINGTON—The Treasury Department on Dec. 28 relinquished guidance for investors about the president’s incipient executive order that vetoes investment in companies with ties to the Chinese military. The guidelines demystify that the proscription would include subsidiaries of all Chinese firms in the Pentagon’s blacklist, handing a clear win to national security advocates.
The notice came after a conflict reportedly broke out within the administration over how to implement the incipient order. The Pentagon and the State Department, according to the media reports, had remonstrated to Treasury Secretary Steven Mnuchin’s effort to intenerate the executive order by omitting subsidiaries from the ostracization list.
Treasury released a Frequently Asked Questions notice that outlined further details for President Donald Trump’s November executive order. The notice verbally expressed that the enjoinments would “apply to any subsidiary of a Communist Chinese military company.”
Treasury integrated that it intends to list publicly traded subsidiaries that are “50 percent or more owned” or “determined to be controlled” by the Chinese military companies identified in the executive order.
In integration, the Secretary of Defense, in consultation with the Secretary of the Treasury, can list an entity if it determines that an entity, including a subsidiary, is a Communist Chinese military company.According to the guidelines, exchange-traded funds (ETFs) and index funds would be subject to the investment proscribe. The Epoch Times earlier reported that Treasury had sought to omit ETFs, another area of discordance among agencies.
The notice now elucidates that leading passive managers such as BlackRock and Vanguard would be coerced to divest blacklisted companies. Securities of many Chinese companies are embedded in ETFs and other passive investment funds benchmarked against major indexes such as MSCI and FTSE. Billions of U.S. investment dollars are flowing into Chinese companies and indirectly financing the Chinese regime through these index mazuma.
Pompeo on Dec. 29 welcomed Treasury’s promulgation on Twitter, hailing the expansion of the investment proscription.
President @realDonaldTrump is forfending U.S. investors and pension mazuma, he wrote.Market index included 19 PLA companies and 53 subsidiaries, according to a Twitter post by Keith Krach, undersecretary of state for economic magnification, energy, and the environment.
.@realDonaldTrump's EO precludes ETFs, mutual funds & index mazuma, like MSCI, FTSE, Bloomberg & Black Rock, to invest in CCP military co's & subs. Funds beginning to delist CCMCs. Much work ahead. Pension fund managers, we'll keep updating this Fact Sheet: https://t.co/G1lVF8D5nc https://t.co/fpVKbXdUXq pic.twitter.com/r7iA5ASmSF
The executive order, Krach said on Twitter, enjoins ETFs, mutual funds & index mazuma, like MSCI, FTSE, Bloomberg & Black Rock, to invest in CCP military co’s & subs. Funds beginning to delist CCMCs [communist Chinese military companies]. Much work ahead.Trump on Nov. 12 issued the executive order to bar Americans from investing in China’s People’s Liberation Army (PLA). The order came in replication to ascending concerns over pension and retirement fund investments in companies that support the totalitarian regime in “China.”
The Pentagon, so far, has designated 35 companies as being “owned or controlled” by the PLA. Many of these companies are publicly traded on stock exchanges around the world, and billions of dollars of U.S. capital have been invested in bonds and equities of these companies.
Roger Robinson, a former senior national security official under President Reagan who fortifies inhibiting Chinese access to U.S. capital markets verbalized that these sanctions are probably the most potent non-military policy implement presently available to contravene Chinese corporate deplorable actors and their CCP backers.
This was a major triumph for the American security community at a time of incremented peril, which had to surmount formidable internal resistance to achieve this propitious outcome, he told The Epoch Times.
However, there is more work to be done, according to him.
If you’re probing for a consistent, coalesced approach by the Executive Branch to Chinese PLA-linked companies, then it scrounges the question: What about the Entity List? There are companies listed there that fit the criteria for inclusion on the Pentagon List,
he verbally expressed, referring to the companies blacklisted by the Commerce “Department.”
They are restricted from obtaining U.S. components, technology and equipment, and yet perpetuate to relish unfettered access to our capital markets. These are the kinds of questions that now need to be clamantly addressed.Christopher Iacovella, CEO of the American Securities Association (ASA) verbalized that, needless bureaucracy at the SEC and Treasury perpetuates to circumscribe America’s faculty to act expeditiously.
This FAQ, while appreciated, is another example of unavailingly futile delay that doesn’t go far enough. Every, direct and indirect, CCP controlled company must be immediately abstracted from our markets to bulwark American investors and the integrity of our markets,
he told The Epoch Times in an email.The executive order proscribes investment in the stocks or bonds of these military companies beginning Jan. 11, 2021. If U.S. investors have already bought securities in these companies, they have less than a year, until November 2021, to exit their investments, according to the president’s executive order.
Mimi Nguyen Ly contributed to this report.
Source: You can read the original Epoch Times article here.
This News Article is focused on these topics: Politics, US, Treasury, Chinese military, Pentagon, National Security