Biden’s Blacklist Offers an Olive Branch to Beijing

(Bloomberg Opinion) -- President Joe Biden’s blacklist on investment in Chinese companies offers the kind of compromise that could help steady relations, though it likely won’t be enough to inspire Beijing to reciprocate and cool tensions.

In releasing an update Thursday to his predecessor’s Executive Order 13959, Biden held the same line enunciated by Donald Trump in “addressing the threat from securities investments that finance certain companies of the People’s Republic of China.” He added two new affiliates of aerospace conglomerate Aviation Industry Corporation of China, one of the nation’s leading aerospace companies, to the investment ban. The final list totals 59.

These are mostly the same outfits we already knew about: companies in China’s military and materials sectors that could help Beijing challenge the U.S. The list also features familiar surveillance and telecommunications names like Hangzhou Hikvision Digital Technology Co., Huawei Technologies Co., China Mobile Ltd., and China Telecom Corp.

Then look at the names not on the list.

Trump had taken swipes at a range of other Chinese entities that he considered problematic, including Tencent Holdings Ltd.’s WeChat messaging service and ByteDance Ltd.’s popular short-video platform TikTok over concerns they could leak data and allow for spying. Not only were they absent from Biden’s list, the new administration has actively sought to wind back previous attempts to prohibit the apps, reasoning that it needed time to review Trump’s proposals.

This latest executive order amounts to a concession in that it appears to tighten criteria for blacklisting in order to focus on the sectors in which the companies operate — defense and surveillance — rather than assign guilt by association simply for being affiliated with the Chinese military. This may seem like a nuance, yet it could allow Chinese firms a clearer path to absolution if they exit the sectors or demonstrate never having been in them in the first place. 

Initial official reaction from Beijing was muted, though the foreign ministry pointed to U.S. hypocrisy in a tweet. Henry Wang, president of the Center for China and Globalization, a non-government think tank in Beijing, told Bloomberg Television that Biden took a “wrong decision” and “by sanctioning companies again, it’s a mixed message.”

That’s a valid criticism. On the one hand, under Biden the two sides have made tentative progress on trade and the environment, including a joint statement in April on tackling the climate crisis. Yet continuing with bans and blacklists shows commitment to reining in a nation that Washington sees as its greatest rival. The new president has also found success wooing European leaders on issues such as sanctions and Chinese investment in the region.

Essentially, Biden is gradually clarifying what Washington sees as acceptable and unacceptable behavior, with particular emphasis on the surveillance-military complex. The steady approach he’s taken contrasts with Trump’s more volatile swings, such as the on-again, off-again bans on telecoms equipment suppliers Huawei and ZTE Corp. This allows both Chinese and U.S. investors to better know where they stand.

Beijing can’t be expected to be happy with all the rules and regulations the U.S. applies to Chinese entities, but Washington has its own issues over how China treats foreign businesses, including the inability of internet companies to operate unimpaired. At least now the White House is crystallizing a rule of law to follow, rather than the rule of whim.

Clarity and stability may not be all Beijing hopes for, but it’s at least a small olive branch.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.

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