Per the order, starting on January 11th, 2021—just over a week before Biden is expected to be sworn in—any US citizen or US company will be prevented buying any new shares in the companies in question. Investors who currently hold shares, the order goes on to demand, have until November 2021 to completely divest them.
This may be easier said than done since, as Axios notes, many of the targeted companies are wrapped up in mutual funds—popular, heavily diversified investment options which are typically regarded as “safer” than just playing the market.
Like many of the president’s executive orders involving foreign policy, the current document is vaguely worded, and doesn’t name the actual companies subject to the forthcoming crackdown. But this past June, the Financial Times got its hands on a Pentagon-produced list of 20 of the names that are on the chopping block—and two months later, the Department of Defense followed upwith some additional names in an official release, bringing the total list to 31 China-based companies. These include the hardware giant Huawei and two telcos currently listed on the New York stock exchange: China Telecom and China Mobile. According to the Order:
the People’s Republic of China (PRC) is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses […]
[These] companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying United States index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to United States capital.Notably absent from the DoD’s watchlist is TikTok, despite being in the Trump administration’s line of fire for months over claims surrounding similar threats to national security. The administration used Executive Orders to single out TikTok in an attempt to force the company to sell off its U.S.-side assets, though the deadline for that sale passed earlier this week. The company filed an injunction with the U.S court of appeals in an attempt to get some clarity, only to be met with what appears to be more stalling.
Right now it’s a bit unclear whether Biden’s campaign will take the similar approach to China-based tech companies. That said, we do know that he has the power to walk back the new executive order.
source: gizmodo.com by Shoshana Wodinsky