Trump bans investments in corporations that the White Home says assist China's navy

U.S. President Donald Trump attends a bilateral meeting with China's President Xi Jinping during the G-20 Summit on June 29, 2019 in Osaka, Japan.

Kevin Lamarque | Reuters

President Donald Trump signed an executive order on Thursday banning Americans from investing in a collection of Chinese companies that the White House believes are supporting the Beijing military.

The order forbids American companies and individuals from owning shares – directly or through mutual funds – in companies that the government claims should contribute to the further development of the People's Liberation Army.

"The People's Republic of China (PRC) is increasingly using the capital of the United States to procure resources and to enable the development and modernization of its military, intelligence and other security apparatus," said the President in the Order.

This investment "continues to enable the PRC to continue to threaten the United States' homeland and the United States armed forces overseas directly, including through the development and use of weapons of mass destruction, advanced conventional weapons, and malicious cyber-capable actions against the United States States and their people. "

The ban will take effect from 9:30 a.m. on January 11, 2021 and is aimed at 31 companies identified by the Defense Ministry as "Chinese Communist Military Companies".

The list of companies includes major government aerospace and construction companies, as well as technology and communications companies such as Inspur Group, Huawei, and China Telecommunications Corp.

The US claims that these companies enable China's military development through access to advanced technology and expertise, and as a result have in part led to Beijing's aggressive global expansion.

An official on President-elect Joe Biden's transition team did not immediately respond to a request for comment on the newly signed ordinance. A spokesman for BlackRock, the world's largest wealth manager, said the company is still reviewing the details of the deal.

The order comes after months of warnings from Trump's national security and economic teams that more drastic measures could be taken to curb American exposure to companies that either support China's military ambitions or fail to meet US disclosure and auditing standards.

National Economic Council Director Larry Kudlow and National Security Advisor Robert O'Brien have spearheaded government calls for crackdown on US investments in Chinese companies.

"The President's action is to protect American investors from the inadvertent provision of capital that will be used to improve the capabilities of the People's Liberation Army and the People's Republic of China's intelligence services," O & # 39; Brien said in a statement Thursday.

Beijing's intelligence agencies "routinely target American citizens and businesses through cyber operations, directly threatening the critical infrastructure, economy and military of America and its allies and partners around the world," he added.

In May, Trump and the US Department of Labor ordered the board of directors tasked with overseeing billions of dollars to halt plans to invest in Chinese companies.

Secretary of Labor Eugene Scalia warned the Federal Retirement Thrift Investment Board at the time that its current plan to invest federal savings would "bring billions of dollars in retirement savings to risky businesses that pose a threat to US national security".

The labor secretary, who cited bipartisan calls to restrict U.S. investment in Chinese stocks, said the president opposed the board's 2017 decision to allow its international fund to track an index containing stocks from China based on national security and investor risk concerns.

Investing in funds, which include Chinese companies, would "place millions of federal employees in the untenable position of not investing in international stocks or saving billions of dollars in retirement savings in risky companies that pose a threat to the nation." Representing US security ". Scalia wrote.

– CNBC's Christina Wilkie contributed to this report.

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