web analytics

President Trump Takes a Parting Shot at Chinese Military

President Donald Trump has only a couple of grenades left in his arsenal, and he has hurled one at China in his final days.

by | Jan 16, 2021 | Articles, International

With only days until he finishes his term in the White House, President Donald Trump might be firing off some MAGA grenades to accomplish his America First mission. China, the country that has been the focus of the Trump administration since the president arrived at 1600 Pennsylvania Avenue, is facing Trump’s wrath as he exits the Swamp. Number 45’s latest tool builds on actions he took in November by prohibiting U.S. investments in alleged Chinese military companies, limiting the world’s second-largest economy from exploiting America’s capital markets. Can the country expect something even more drastic before he gives the throne to President-Elect Joe Biden?

Blacklisting the PLA

The president signed an amendment order that mandates U.S. investors to divest their holdings of securities in Chinese military companies that are blacklisted by the Pentagon. They will have until November 11, 2021, to complete their divestment. According to the amendment, investors are also restricted from possessing securities owned or controlled by the People’s Liberation Army (PLA) entities.

The order stated:

“[A]ny transaction entered into on or before 11:59 p.m. eastern standard time on November 11, 2021, solely to divest, in whole or in part, from securities that any United States person held as of 9:30 a.m. eastern standard time on January 11, 2021, in a Communist Chinese military company … is permitted. Effective at 11:59 p.m. eastern standard time on November 11, 2021, possession of any such securities by a United States person is prohibited.”

In a letter to Vice President Mike Pence and House Speaker Nancy Pelosi (D-CA), Trump confirmed that the Secretary of Defense would be permitted to publicly identify a company that is a part of the Chinese military.

The amendment bolsters an initial Executive Order (E.O. 13959) that was signed in November. This measure banned U.S. investors from buying securities of businesses listed by the Pentagon as owned or controlled by the Chinese military. The E.O. expanded a 1999 law that required the Pentagon to gather a list of Chinese military firms. It only began complying with the mandate in 2020.

So far, the Pentagon has named 35 companies operating directly or indirectly in the U.S. that are owned or controlled by the PLA. These include the nation’s top chipmaker Semiconductor Manufacturing International Corp. (SMIC), and oil titan CNOOC Ltd. There had been speculation that Alibaba, Baidu, and Tencent would be added to the list, but news outlets have reported that they will be spared for now.

In December, the Treasury Department verified that index funds and exchange-traded funds (ETFs) would not be allowed to finance Chinese military firms and their subsidiaries.

Neither the Chinese embassy in Washington nor officials in Beijing have publically commented on the actions.

How Are Markets Reacting?

For now, Wall Street is erring on the side of caution amid the paucity of clarity. According to Bloomberg, market observers think that the ban could generate a broader impact than might be intended. Asian bond fund managers find it challenging to sell notes of the listed businesses, and U.S. securities firms are unsure if the E.O. prevents them from allowing investments in these companies for all clients or only those operating domestically. The consensus is that the situation is fluid, and some things could be changed with a new president. Still, Trump’s decision has weighed heavily on Chinese stocks.

Greenfield Investments

If the goal is to prevent China from attaining U.S. capital to develop, enhance, and modernize the PLA, this executive order may not be enough. As Liberty Nation reported last year, the Asian economic powerhouse has been exporting its state-owned enterprises (SOEs), which are funded by government-run banks, to the U.S. The primary objective is to advance Chinese interests and gain a competitive edge. Despite Secretary of State Mike Pompeo telling governors and mayors they “are being worked,” states and cities have been welcoming these firms with open arms, using the opportunity to plug holes in their budgets

Cementing Trump’s Tough-on-China Legacy

It is evident that President Trump is attempting to cement his tough-on-China legacy. Since he announced his campaign for president, the real estate billionaire mogul has routinely railed against the world’s second-largest economy for “ripping off” America and taking advantage of U.S. leaders. From initiating the trade war to blaming China for the coronavirus pandemic, Trump has not been shy about taking the fight to Beijing. Will U.S.-China relations be permanently altered, or will his successors allow ties to return to normal?

~

Read more from Andrew Moran.

Read More From Andrew Moran

Latest Posts

Social Media or Bust?

While social media can be a good venue to find and connect with relatives and friends, it has been accused of...

White House Muzzling Free Speech?

The Supreme Court hears arguments against social media censorship. https://www.youtube.com/watch?v=RY1v36oBgKc...

Survey Says: It’s Time to Leave New York

Things are tough all over in New York, and a recent citizens survey describes just how dissatisfied residents are...

Latest Posts

Social Media or Bust?

While social media can be a good venue to find and connect with relatives and friends, it has been accused of...