Trump administration ratchets up pressure on Chinese firms in final days

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Suban Abdulla
·3 min read
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(COMBO) This combination of pictures created on May 14, 2020 shows recent portraits of   China's President Xi Jinping (L) and US President Donald Trump. - US President Donald Trump said on May 14, 2020, he is no mood to speak with China's Xi Jinping, warning darkly he might cut off ties with the rival superpower over its handling of the coronavirus pandemic. "I have a very good relationship, but I just -- right now I don't want to speak to him," Trump told Fox Business. (Photos by Dan Kitwood and Nicholas Kamm / various sources / AFP) (Photo by DAN KITWOOD,NICHOLAS KAMM/AFP via Getty Images)
The US has sanctioned Chinese officials and firms for alleged misdeeds in the South China Sea and imposed an investment ban 44 companies. Photos: Dan Kitwood and Nicholas Kamm / various sources / AFP via Getty Images

In a final swipe as his days in charge near an end, US president Donald Trump has used his time to drum up pressure on China and its companies.

Officials, oil firms and technology companies have all been sanctioned and punished for what Washington says "aids" China's military and "directly threatens" US security.

America sanctioned Chinese officials and firms for alleged misdeeds in the South China Sea and imposed an investment ban on 44 companies.

Executives of state-owned businesses, oil giant China National Offshore Oil Corp (0883.HK) and officials of the Chinese Communist Party and military, face new rules for allegedly using coercion against states with rival South China Sea claims.

The military blacklist will increase tensions with China — the US’s strategic rival in Asia — days before president-elect Joe Biden takes office on 20 January.

On Friday, Trump told government departments to look at ways to reduce procurement of Chinese goods and services to minimise the risks from espionage.

National security adviser Robert O’Brien accused China of targeting the information systems of the US government for personnel records, military plans, and other data through cyber and other means.

“For this reason, the United States must take corresponding actions to protect American interests. We must adjust our regulations and policies and take other necessary actions to reduce the risk of PRC technical and human espionage activities directed at the federal government,” he said in a statement.

On Saturday, the Trump administration imposed sanctions on Chinese officials in a response to how the country handled the crackdown on the pro-democracy movement in Hong Kong, which resulted in arrests of politicians and activists last week.

WATCH: What does a Joe Biden presidency in the US mean for the global economy?

The US defence department also added nine more firms on Thursday to its list of firms that it says have Chinese military ties, rounding out the total from 35 to 44.

The updated blacklist includes smartphone manufacturer Xiaomi (1810.HK), the state-owned plane maker Commercial Aircraft Corporation of China (COMAC). China planned to use COMAC to create a narrow-body plane that can compete with Boeing (BA) and Airbus (AIR.PA).

But, despite senior officials pushing to add Alibaba (BABA), Tencent (TCEHY) and Baidu (BIDU) — the US spared the heavyweights from the investment ban list.

China’s Huawei and Hikvision (002415.SZ) — one of the world's largest manufacturers and suppliers of video surveillance equipment — are among the blacklisted companies.

READ MORE: Wall Street investment banks to delist Hong-Kong products following US ban

Firms will be subject to a new US investment ban which forces American investors to divest holdings of the blacklisted firms by 11 November 2021.

Last week, US investment banks JPMorgan (JPM), Goldman Sachs (GS) and Morgan Stanley (MS) units said they will delist a total of 500 Hong Kong-listed structured products.

While the order doesn’t specify specific penalties for violations, it gives the US Treasury Department the ability to invoke “all powers” granted by the International Emergency Economic Powers Act, which permits the use of tough sanctions.

Meanwhile, China has fired back at the US with new rules to counter foreign sanctions on Chinese companies and citizens.

The country signed an order last week, which empowers China to tell firms and citizens to ignore foreign restrictions and sue global businesses for complying.

This means that China can strike back at countries or companies that comply with US bans such as Trump’s ban on Huawei.