Joe Biden to amend Trump's China blacklist, target key industries

US President Joe Biden plans to amend a US ban on investments in companies linked to China’s military this week, after the Trump-era policy was challenged in court and left investors confused about the extent of its reach to subsidiary firms, people familiar with the matter said.

Under Biden’s amended order, the Treasury Department will create a list of companies that could face financial penalties for their connection to China’s defence and surveillance technology sectors, the people said. Until now, the financial sanctions and selection of targeted companies were tied to a congressionally mandated Defense Department report.

The amended order, which Biden is expected to sign later this week, will change the criteria for blacklisting entities to capture those that operate in the defence or surveillance technology sectors. The Trump order targeted companies owned, controlled or otherwise affiliated with the Chinese military.

The Biden administration is set to keep a large number of previously listed entities, and Treasury’s Office of Foreign Assets Control will add new entities as part of the order, one of the people said. Treasury would consult the State and Defense departments in the listing process. Spokespeople for the White House and the Treasury Department didn’t respond to requests for comment.

Stock Impact

The US should respect the rule of law and correct its mistakes, Chinese Foreign Ministry Spokesman Wang Wenbin said at a regular press briefing in Beijing.

The ban “ignores the facts and the real situation of relevant companies, severely undermines normal market rules and order, and harms the legal rights and interests of the Chinese companies and also the interests of global investors, including the American ones,” he said. “We will take measures to firmly uphold the interests of Chinese companies.” Some stocks related to China’s defence industry dropped on Thursday, led by AVIC Jonhon Optronic Tech­nology and AECC Aviation Power, while already-blacklisted Advanced Micro-Fabrication Equipment fell 3.9 per cent.

Xiaomi, which was dropped from the list last month after challenging the Trump administration order in a lawsuit, advanced 2.4 per cent in Hong Kong. After two Chinese companies successfully challenged the order, Biden’s team said a revision of the policy was necessary to ensure it was legally sound and sustainable in the long-term. By shifting responsibility to Treasury, the Biden team aims to solidify the legal standing for the penalties, one of the people said.

JPMorgan applies to take full control of China securities venture

JPMorgan Chase & Co has applied to take full control of its China securities venture and is ramping up hiring as the US bank plows ahead with an expansion in the world’s second-largest economy. The bank has entered commercial agreements with existing partners in its securities and asset management ventures, said Mark Leung, the bank’s chief executive officer for China, in a Bloomberg Television interview. It’s increasing its staffing about 16 per cent to 17 per cent a year, he said.

Fed plans to sell corporate bond holdings

The Federal Reserve Board plans to begin gradually selling a portfolio of corporate debt purchased through an emergency lending facility launched last year, as the pandemic was spreading panic through financial markets.

“Portfolio sales will be gradual and orderly, and will aim to minimise the potential for any adverse impact on market functioning by taking into account daily liquidity and trading conditions for exchange traded funds and corporate bonds,” the Fed said.