US President Donald Trump has issued an executive order banning ‘Communist Chinese military companies’ from any kind of trading in US securities, saying that Beijing has exploited those to finance its military build-up.

People’s Republic of China is “increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses,” which allows Beijing to “directly threaten the United States homeland and United States forces overseas,” Trump said in the order, issued on Thursday.

He accused the PRC of “developing and deploying weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions against the United States and its people.”

National Security Advisor O’Brien: “Today, President Donald J. Trump signed an Executive Order to protect American investors from funding Communist Chinese military companies…”

Declaring this an “unusual and extraordinary threat… to the national security, foreign policy, and economy of the United States,” in statutory language required for such measures, Trump ordered  a total ban on “any transaction in publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities” with companies designated under the order, beginning on January 11, 2021.

The exact definition of who qualifies as a “Communist Chinese military company” is delegated to the Pentagon and the US Treasury, under a slew of sanctions laws. Given that Trump argued China is “compelling” civilian companies to support its military and intelligence activities, it is likely that the sanctions won’t be limited to entities explicitly tied to the People’s Liberation Army.

Thursday’s announcement comes two days after the State Department announced new US sanctions on officials in Hong Kong, for allegedly “undermining the region’s autonomy.”

Secretary of State Mike Pompeo, Attorney General Bill Barr and FBI Director Chris Wray have all made speeches over the past several months about the political, economic and intelligence threat of “Communist China” to the US.  

Last month, the US had approved a record $5 billion weapons deal to the government of Taiwan, an island China considers its renegade province. China’s Ministry of Foreign Affairs responded by announcing sanctions on a number of US companies and individuals connected with the deal. While the exact scope of the sanctions wasn’t clear, the companies named in Beijing’s blacklist included Lockheed Martin, Boeing Defense and Raytheon, the heart of the US military-industrial complex.

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