59 Chinese Military-Linked Firms Hit With U.S. Sanctions
The Treasury Department cut access to cash obtained from U.S. financial markets for Chinese military companies in attempt to block Beijing from building up.
The regulations prohibit all U.S. financial and stock companies and individual investors from engaging in securities trading that in any way financially benefits the named Chinese enterprises or their executives.
The companies were designated as military entities earlier by the Pentagon. The companies include a number of major Chinese aerospace and telecommunications firms, including Huawei Technologies, that have already been targeted by the U.S. government for its suspected links to Chinese intelligence services.
The regulations call for either civil or criminal penalties for anyone who violates sanctions contained in a November 2020 executive order by former President Donald Trump, as well as additional sanctions in an order signed by President Biden in June.
The sanctions target parts of the military industrial complex that are closely aligned with the civilian economy in China, in what Beijing has dubbed a “fusion strategy.” The Treasury’s Office of Foreign Assets Controls said that even more detailed sanctions controls will be put in place later, the department said in announcing the rules Tuesday.
The Trump administration’s November 2020 order listed 31 Chinese military companies said Beijing is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence and other security apparatuses.
At the same time, those companies raise capital by selling securities to United States investors that trade on public exchanges both here and abroad, lobbying U.S. index providers and funds to include these securities in market offerings, and engaging in other acts to ensure access to U.S. capital, the order said.
In that way, the People’s Republic of China exploits United States investors to finance the development and modernization of its military.
Cutting off access to U.S. capital markets seeks to limit China’s ability to bolster military, intelligence and other security agencies that are using the “ostensibly private” economy, the order said.