In the cold war between Washington and Beijing, the former struck another blow this week. U.S. President Joe Biden revamped the blacklist of Chinese firms with alleged ties to defense or surveillance and China was quick to condemn the move.
The list was initiated by the Department of Defense under ex-President Donald Trump in late 2020 and included 31 companies banned from U.S. investment. As a result, China’s three main telecoms and oil giant CNOOC (HKEX: 0883) are delisted from the New York Stock Exchange. Some firms, however, escaped the fate: Xiaomi Corp. (HKEX: 1810) and Luokung Technology Corp. (Nasdaq: LKCO) won in court against being designated as a military company and were allowed back on the global indexes.
Now, it seems the victory on the side of China was short-lived. Biden’s expanded blacklist now contains 59 companies. And more may follow - updates can be expected on a rolling basis. The ban against the entities will take effect on Aug. 2. Those already holding shares in these companies have one year to divest from them.
The list reiterates the ban against tech giants Hikvision, Huawei, the three top telecoms, as well as CNOOC, and Semiconductor Manufacturing International Corp. (HKEX: 0981; SHA: 688981; OTC: SMICY), China’s top chipmaker. Xiaomi has been removed from the new list.
The move, unsurprisingly, led to vehement objections by Beijing. China vowed to protect its companies’ legitimate rights and interests and said the action was politically motivated. Foreign ministry spokesman Wenbin Wang urged Washington to “provide Chinese enterprises with a fair and nondiscriminatory business and investment environment."
However, while it may not seem so at first glance, the new list shows a softening of the intense trade war seen under Trump, as Bloomberg noted. The medium sees “room for dialogue” in the “broadly worded order,” suggesting possibility of continued talks.