China's largest shipbuilding company has been 'blacklisted' again! Biden's actions are even tougher this time!

Continuing the tough stance of former President Trump, US President Biden further expanded the investment ban on Chinese companies, increasing the number of companies on the list from 44 to 59. In addition to Huawei, SMIC, and CASC, companies under China Shipbuilding Group and CNOOC remain on this "blacklist." This is an escalation of Trump's actions; Biden's approach is even more aggressive!

59 Chinese companies added to investment blacklist for alleged military ties

According to the White House website, on June 3, US President Biden signed an executive order, citing "countering threats from Chinese military-industrial companies" as the reason for adding 59 Chinese companies to the investment blacklist, prohibiting US individuals and institutions from engaging in investment transactions with the listed companies.

The statement said that the executive order will take effect at 12:01 AM EDT on August 2. There is a 60-day grace period before the order takes effect, and Americans who have already invested in these companies will have one year to divest.

This new executive order extends the executive order signed by former President Trump last November, increasing the number of sanctioned companies from 44 to 59, expanding the scope of the crackdown, and claiming to have added considerations of so-called "democracy" and "human rights".

The White House website announcement states that, according to relevant US laws, US President Biden believes it is necessary to take further measures to address the national emergency declared in Executive Order 13959 of November 12, 2020, including the threat posed by the People's Republic of China's (PRC) military-industrial complex and its participation in military, intelligence, and security research and development programs, as well as the production of weapons and related equipment under China's civil-military integration strategy.

It is understood that former US President Trump issued an investment ban targeting "Chinese military-related companies" in November 2020, initially including 31 companies. Before the Trump administration left office, this list was expanded to 44. In Biden's new list, 26 of the original 44 companies are retained, and 33 more have been added, including some affiliated companies of the previous 44, bringing the total to 59.

The latest list of 59 companies includes seven companies: CSSC, CSIC, CSSC Marine, China Power, China Shipbuilding Industry Corporation, and CNOOC. Most of these companies have remained on the blacklist since last November.

Biden renamed the list to "Non-SDN Chinese Military-Industrial Complex Companies List (NS-CMIC List)" and changed the primary managing department from the US Department of Defense to the US Department of the Treasury. The restricted content remains largely unchanged. The US government prohibits Americans from engaging in the purchase or sale of any publicly traded securities involving sanctioned companies, or any publicly traded securities derived from or intended to provide investment risk for such securities.

Experts say that the sanctions will cause the blacklisted Chinese companies to lose access to influential US investors in the global capital market. US investors may sell off shares of sanctioned Chinese companies, and investors from other countries may also sell off shares due to reduced liquidity, leading to a sharp drop in share prices. In the long term, these Chinese companies will have reduced financing channels, and their development may be constrained.

Appendix: List of 59 companies

China Aero Engine Corporation

Aerospace Rainbow Unmanned Aerial Vehicle Co., Ltd.

Aerospace Communication Holding Group Co., Ltd.

Aerospace Chengguang Co., Ltd.

Anhui Great Wall Military Industry Co., Ltd.

Aviation Industry Corporation of China

AVIC High-Tech Co., Ltd.

AVIC Heavy Machinery Co., Ltd.

AVIC Optoelectronics Technology Co., Ltd.

AVIC Shenyang Aircraft Industry Group Co., Ltd.

AVIC Xi'an Aircraft Industry Group Co., Ltd.

Changsha Jingjia Microelectronics Co., Ltd.

China Academy of Launch Vehicle Technology

China Aerospace Science and Industry Corporation Limited

China Aerospace Science and Technology Corporation

Aerospace Times Electronic Technology Co., Ltd.

AVIC Avionics Systems Co., Ltd.

China Communications Construction Company Limited

China Communications Construction Group

China Electronics Information Industry Group Corporation

China Electronics Technology Group Corporation

China General Nuclear Power Group

China Shipbuilding Industry Corporation Marine Defense and Information Warfare Co., Ltd.

China Mobile Communications Group Co., Ltd.

China Mobile Limited

China National Nuclear Corporation

China National Offshore Oil Corporation

China North Industries Group Corporation (also known as China North Industries Group Corporation)

China Nuclear Industry Construction Co., Ltd.

China Railway Construction Corporation Limited

China Satcom Group Co., Ltd.

China Shipbuilding Heavy Industry Co., Ltd.

China Shipbuilding Heavy Industry Group Power Co., Ltd.

China Ordnance Equipment Group Co., Ltd. (also known as China South Industries Group Corporation)

China Dongfanghong Satellite Co., Ltd.

China Shipbuilding Industry Corporation

China Telecom Corporation Limited

China Telecom Group Company Limited

China Unicom (Hong Kong) Limited

China United Network Communications Group Co., Ltd.

China National Offshore Oil Corporation

Henan Zhongguang Optical Group Co., Ltd.

CSSC Marine and Defense Equipment Co., Ltd.

Fujian Torch Electronic Technology Co., Ltd.

Guizhou Aerospace Electric Co., Ltd.

Hangzhou Hikvision Digital Technology Co., Ltd.

Huawei Investment Holding Co., Ltd.

Huawei Technologies Co., Ltd.

Inner Mongolia First Machinery Group Co., Ltd.

Inspur Group

Jiangxi Hongdu Aviation Industry Group Co., Ltd.

Nanjing Panda Electronics Co., Ltd.

Northern Navigation and Control Technology Co., Ltd.

Panda Electronics Group Co., Ltd.

Proven Glory Capital Limited; (A company registered in the British Virgin Islands under Huawei Investment & Holding Co., Ltd., previously used by Huawei for bond issuance)

Proven Honour Capital Limited. (A company registered in the British Virgin Islands under Huawei Investment & Holding Co., Ltd., previously used by Huawei for bond issuance)

SMIC (Semiconductor Manufacturing International Corporation)

Shaanxi Zhongtian Rocket Technology Co., Ltd.

AVIC Electromechanical Instrument Co., Ltd.

Biden continues his tough stance on China, and the Chinese Ministry of Foreign Affairs responds: resolutely opposed

Previously, Bloomberg reported that Biden is expected to sign a new executive order this week to revise the investment ban on "PLA-related Chinese companies" from the Trump administration. This decision comes after two Chinese companies successfully challenged the Trump administration's ban, "giving the Biden administration a taste of defeat," and the revised ban "may have a broader scope." These two Chinese companies are Xiaomi and Luokung Technology.

Bloomberg stated that there was confusion over the interpretation of the investment ban issued by the Trump administration, and one of Wall Street's concerns was that they were unsure whether Trump's investment ban applied to some companies that might be related to the list, including subsidiaries or companies with similar names.

Hong Kong's South China Morning Post reported that after Biden took office, Chinese companies including Xiaomi, Luokung Technology, and Huawei immediately filed lawsuits, claiming that designating them as "PLA-related companies" was baseless. Xiaomi and Luokung Technology both won rulings exempting them from sanctions, and Xiaomi was also removed from the blacklist. Bloomberg stated that after Xiaomi and Luokung Technology successfully challenged Trump's order through litigation, the Biden administration felt it necessary to revise this investment ban to ensure its legal rationality and long-term sustainability.

The Biden administration pledged a more diplomatic approach to China after its predecessor's "major moves." However, Biden also stated that he would maintain a tough line on China in several areas, including defense and high technology. Foreign media stated that taking a tough stance on China is one of the few approaches that has bipartisan support in Congress, with lawmakers from both parties intending to curb China's growing global influence.

Earlier on June 3, Gao Feng, spokesperson for the Ministry of Commerce, stated at a regular press conference that in the past week, Vice Premier Liu He had separate phone calls with US Trade Representative Katherine Tai and Treasury Secretary Janet Yellen. Both sides believed that the exchanges were professional, candid, and constructive, and that normal communication had begun in the China-US economic and trade field. However, just a few hours later, the Biden administration's new list of investment bans on Chinese companies was released.

The BBC believes that the Biden administration's revision and expansion of the investment ban on Chinese companies shows that the Biden administration is continuing the Trump administration's tough stance on China. At least in the technology sector, it continues to "clash" with China.

On the 4th, a reporter from Reuters asked at the Ministry of Foreign Affairs' regular press conference about the matter, asking for the Ministry's assessment and how China views the new executive order compared to similar bills from the Trump era.

In response, spokesperson Wang Wenbin stated that the US government is generalizing the concept of national security, abusing state power, and using all means to suppress and restrict Chinese companies, which China firmly opposes. Wang Wenbin pointed out that the US's actions violate market laws, disrupt market rules and order, and harm not only the legitimate rights and interests of Chinese companies but also the interests of global investors, including US investors.

"China urges the US to respect market laws and principles, revoke various so-called lists suppressing Chinese companies, and provide a fair, just, and non-discriminatory business and investment environment for Chinese companies. China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies." said Wang Wenbin.