It could add to pressure on companies that already face U.S. export bans and other sanctions.
President Donald Trump has stepped up a conflict with China over security and technology by issuing an order barring Americans from investing in companies that U.S. officials say are owned or controlled by the Chinese military.
The impact of the order on Thursday wasn’t immediately clear but it could add to pressure on companies including telecom equipment giant Huawei and video surveillance provider Hikvision that already face U.S. export bans and other sanctions.
It is Mr. Trump’s first major action toward China since he lost his re-election bid to challenger Joe Biden. Economists and political analysts have said even if Mr. Trump was defeated he was likely to launch more actions Beijing before he leaving office on Jan. 20.
Political analysts expect little change in policy under Mr. Biden due to widespread frustration with China’s trade and human rights records and accusations of spying and technology theft.
U.S. officials complain China’s ruling Communist Party takes advantage of access to American technology and investment to expand its military, already one of the world’s biggest and most heavily armed.
Thursday’s order complains the companies targeted “directly support” the Chinese military, intelligence and security apparatus. It said Beijing “exploits United States investors” to finance military development by selling securities in American and foreign financial markets.
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The order bars American investors from conducting any transactions in publicly traded securities issued by any Chinese companies designated by the secretary of defense as being linked to the Communist Party’s military wing, the People’s Liberation Army.
The Pentagon earlier designated 31 companies as being owned or controlled by the Chinese military. Many are military contractors or state-owned companies such as phone carrier China Telecom Ltd. But the list also includes Huawei Technologies Ltd. and Hikvision Digital Technology Co., which say they are private and deny they are controlled by the military.
Most of those companies have no shares traded in the United States but many sell stocks, bonds and other securities in markets outside mainland China that are accessible to American investors.
Sales made to divest securities of those companies will be allowed until one year from now on Nov. 11, 2021.
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