In a notice posted yesterday, President Biden decided to continue for 1 year the national emergency declared by President Trump, and later expanded by Biden, with respect to "the threat from securities investments that finance" certain Chinese companies.
As explained in yesterday's notice, on November 12, 2020, by Executive Order 13959, President Trump declared a national emergency pursuant to the International Emergency Economic Powers Act to deal with "the unusual and extraordinary threat to the national security, foreign policy, and economy of the United States constituted by the threat from securities investments that finance certain companies of the People's Republic of China (PRC)." In particular, President Trump found that "the PRC is increasingly exploiting United States capital to resource and enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas." Chinese civilian companies who support the PRC's military, intelligence, and security apparatuses and aid in their development and modernization "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." President Trump further found that "the PRC's military-industrial complex, by directly supporting the efforts of the PRC's military, intelligence, and other security apparatuses, constituted an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States."
Under Order 13959, as set out in detail there, U.S. persons were prohibited from trading the securities of the designated companies. The order included a list of more than 30 Chinese companies, including Huawei and various companies in the aerospace, railway, shipbuilding, construction and telecommunication sectors.
Subsequently, on January 13, 2021, President Trump signed Executive Order 13974, amending Executive Order 13959; and on June 3, 2021, President Biden signed Executive Order 14032, which expanded the scope of the national emergency declared in Executive Order 13959.
As part of the expansion order, President Biden found that "additional steps are necessary to address that national emergency," including "the threat posed by the military-industrial complex of the PRC and its involvement in military, intelligence, and security research and development programs, and weapons and related equipment production under the PRC's Military-Civil Fusion strategy." In addition, he found that "the use of Chinese surveillance technology outside the PRC and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constituted unusual and extraordinary threats to the national security, foreign policy, and economy of the United States, and I expanded the national emergency to address these threats."
Yesterday's announcement noted that because this situation continues "to pose an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States," President Biden determined that the national emergency must continue in effect beyond November 12, 2021, and he therefore continued for 1 year the national emergency declared in Executive Order 13959 with respect to the threat from securities investments that finance certain companies of the PRC and expanded in Executive Order 14032.
An updated list of covered companies is available at the end of EO 14032. As noted by Reuters, "U.S. entities are barred from buying or selling publicly traded securities in target companies, which include China's top chipmaker SMIC and oil giant CNOOC. Biden's new list added about 10 publicly listed companies, but removed some other top names including Commercial Aircraft Corp of China (COMAC), which is spearheading efforts to compete with Boeing Co and Airbus, and two that challenged the ban in court - Gowin Semiconductor Corp and Luokung Technology Corp."