Biden Delays Revamp of Trump Blacklist for China Investments

President Joe Biden’s administration plans to delay by two weeks a ban on new U.S. investments in certain Chinese companies, as officials draft guidance to clarify a Trump-era policy that confused Wall Street, according to three officials familiar with the matter.

The Treasury Department announced Tuesday that investors face a June 11 deadline to buy shares in subsidiaries of companies already on a U.S. blacklist or sell shares to Americans. Until then, the White House is working to clarify how the China investment ban applies to the subsidiaries, said the people, who discussed the plan on condition of anonymity.

Treasury officials had previously set a May 27 deadline to clarify the scope of the investment restrictions. One of the people said the review of the investment ban may be completed by June 11, though the Biden administration’s policy won’t necessarily be published by then.

Biden Delays Revamp of Trump Blacklist for China Investments

Biden’s team has been examining former President Donald Trump’s executive order that was issued in November, banning U.S. investments in Chinese companies owned or controlled by the military. Biden’s decision on the ban has been closely watched on Capitol Hill, where lawmakers are eager for a tougher stance on Beijing.

One administration official said that the U.S. is not changing its policy on investments tied to the Chinese military. The administration seeks to maintain the ban in a way that is legally sound and can be sustained in the long-term, they said.

The official said the review reflects a deep national security concern about U.S. investments linked to the Chinese military.

The administration’s position has been just as scrutinized on Wall Street, where Trump’s order caused confusion over whether the investment ban applied to an array of companies that may be connected -- either as a subsidiary or by carrying a similar name -- to those on the blacklist.

The Biden review includes an evaluation of companies on the list, including three of China’s biggest telecommunications firms that the New York Stock Exchange delisted in January-- China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. It’s unclear whether the administration will change the list, but Biden intends to keep up financial pressure on Chinese military companies, according to people familiar with the matter.

U.S. courts have found issues with Trump’s executive order. The U.S. agreed to remove Xiaomi Corp. from the blacklist after the Chinese smartphone maker sued the government earlier this year. Biden officials don’t think the Xiaomi case prevents them from imposing investment restrictions, but they intend to build a stronger argument against each company.

As part of the review, national security aides, Treasury officials and the White House Counsel’s Office staff have also sought to bolster the legal case for restricting U.S. investment to prevent future litigation.

Investors have one year to fully divest from any company once it is added to the list. For the original set of companies, the deadline is Nov. 11.

©2021 Bloomberg L.P.

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