WASHINGTON — The Biden administration is expanding a Trump-era order that banned U.S. investment in Chinese companies that it said support China’s military to include those selling surveillance technology, calling the entities a threat to U.S. interests and values.

A new executive order that was set for release Thursday broadens prohibitions that the Trump administration enacted and moves authority for the ban to the Treasury Department, from the Defense Department, to give it stronger legal grounding, senior administration officials said. They spoke on the condition of anonymity to preview the order before its release.

The new order “prevents U.S. investment from supporting the Chinese defense sector, while also expanding the U.S. government’s ability to address the threat of Chinese surveillance technology firms that contribute – both inside and outside China – to the surveillance of religious or ethnic minorities or otherwise facilitate repression and serious human rights abuses,” the administration said in a fact sheet describing the ban, which takes effect on Aug. 2.

Senior administration officials said it was important to move the program to the Treasury Department because companies included on the Trump administration’s Defense Department list, including smartphone manufacturer Xiaomi, had successfully challenged their inclusion in court.

The Biden administration did not include Xiaomi on the list of 59 prohibited companies it released Thursday.

The preservation of aspects of Trump’s ban is another sign that Biden is continuing his predecessor’s tough approach toward China.

“This looks to be another example of the Biden administration taking a Trump policy and improving and expanding it,” said Eric Sayers, visiting fellow at the American Enterprise Institute.

David Feith, a former senior Trump administration official, said the Biden administration’s maintaining and broadening of the Trump era order was “a welcome thing.”

More fundamentally, said Feith, former deputy assistant secretary of state for East Asian and Pacific Affairs, “it reflects the strong degree of bipartisan concern in Washington about U.S. capital flows and U.S. economic ties with China’s military and its sprawling security and surveillance state.”

Feith, now an adjunct senior fellow at the Center for a New American Security, said that the shift of enforcement authority from the Pentagon to Treasury could complicate implementation, though, because “the Department of Defense takes a fundamentally national security-focused perspective on things and Treasury traditionally does not.”

Biden’s order, like Trump’s, bans U.S. investors from buying stocks or bonds issued by a number of Chinese companies.

A number of the military-linked companies banned by Biden also appeared on Trump’s list, including the defense contractor China Electronics Technology Group Corp. and China Mobile Communications Group and China Telecommunications Corp.

Biden’s order also bans investment in two companies – Hangzhou Hikvision Digital Technology Co., Ltd. and Huawei Technologies Co., Ltd. – on the grounds that they sell surveillance technology. The Trump ban had prohibited investment in those firms on the grounds that they supported China’s military.

The Biden administration officials said they expect to place additional companies on the list in the future.

One former U.S. official said “wresting authority” from the Pentagon and moving it to Treasury amounts to a “sidelining of the Pentagon” and will undermine the effort to curb Chinese abuses.

“The Treasury Department, which has been under enormous pressure by Wall Street on the issue, at the end of the day is focused on the liquidity and depth of the capital markets and is much less inclined to sanction Chinese companies,” said the official, who spoke on the condition of anonymity because of the matter’s sensitivity.


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