US won’t ban investments in Alibaba, Tencent, Baidu – but 9 more companies close to being off limits

0
10

Topline

Following a weeks-long disagreement between Treasury officials and the State Department, the Trump administration reportedly decided not to ban U.S. investments in Chinese tech giants Alibaba, Tencent, and Baidu, but it will ban Americans from investing in nine other companies in a move. this further exacerbates tensions between the world’s two largest economies.

Highlights

The Defense Ministry plans to add nine companies, which have not yet been publicly identified, to its list of “Communist Chinese military companies” as of Wednesday, the Wall Street newspaper reported for the first time.

Despite reports to the contrary, US officials ultimately decided not to add Alibaba, Tencent and Baidu to the list after Treasury Secretary Steven Mnuchin and other members of the department feared it could trigger economic fallout. boosted by widespread sales in the heavily traded Chinese tech giants.

The updated list is expected to bring the total number of companies considered “Chinese military-owned or controlled” to 40; Others on the list include China Telecom, China Mobile and famous smartphone maker Huawei.

President Donald Trump issued an executive order in November effectively banning investments in these companies from January 11; according to the Wall Street newspaper, US investors have until November to sell shares of one of the newly banned companies.

U.S.-listed Alibaba and Tencent shares jumped 6% and 3% immediately after the report, while Baidu shares on the Nasdaq were roughly flat.

The Defense Ministry did not immediately respond to TBEN‘request for comment.

Tangent

In response to Trump’s decree, the New York Stock Exchange nearly deregistered China Telecom, China Mobile, and China Unicom, but reversed the decision on Jan. 4 after “further consultations with relevant regulatory authorities.”

Crucial quote

Companies identified by the Defense Ministry as owned or controlled by the Chinese military “raise capital by selling securities to American investors who trade on public exchanges at home and abroad, putting pressure on suppliers of capital. ‘US indices and funds to include these securities in market offerings, and to engage in other acts to secure access to US capital,’ the executive order reads. “In this way the [People’s Republic of China] exploits American investors to finance the development and modernization of its military. “

Key context

The Trump administration has taken huge steps to crack down on perceived spy threats from Chinese multinationals. The president declared a national emergency to facilitate the November decree, saying China “is forcing Chinese civilian companies to support its military and intelligence activities”, thus posing “an unusual and extraordinary threat” to national national security. . Meanwhile, the Justice Department indicted Huawei in 2019 for allegedly stealing trade secrets from T-Mobile, and in February it imposed additional charges on the conglomerate for racketeering and further conspiracy to steal trade secrets. to six American companies.

Further reading

Americans will not be banned from investing in Alibaba, Tencent and Baidu (The Wall Street Journal)

Trump bans Americans from investing in Chinese companies that support Chinese military (TBEN)

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here