US tweaks requirement for investors to dump Chinese tech stocks
(2022/06/07)
- Reference: 1654575308
- News link: https://www.theregister.co.uk/2022/06/07/us_china_shares_ban_eased/
- Source link:
The United States last week quietly eased its ban on investors holding stock in, or otherwise profiting from, Chinese companies that are felt to have ties to China's military.
The ban was first imposed by president Donald Trump with a 2020 [1]executive order that forbade US-based individuals or entities owning shares in private Chinese companies identified as offering support to China's military, intelligence, and security agencies, by auditing their "development and modernization."
President Biden later issued a [2]similar order of his own.
[3]
Both documents named Huawei, server-maker to the stars Inspur, China's top chipmaker SMIC, and controversial video camera maker Hikvision as verboten to US investors, along with many other Chinese companies.
[4]
[5]
Trump's order set a divestment deadline of January 11, 2021, but Biden's order extended the deadline to June 3, 2022.
Two days before that deadline, the Office of Foreign Assets Control updated its [6]FAQ with instructions that US investors can still receive dividends from the named Chinese companies and are not required to divest shares.
[7]India probes ZTE and Vivo over finances, sparking Chinese protests
[8]Shanghai lockdowns to end, perhaps easing tech supply chain woes
[9]Revealed: The semi-secret list of techs Beijing really really wishes it didn't have to import
Buying more shares remains forbidden, and US entities are not allowed to facilitate such trades.
The Register understands the updated FAQ does not represent a softening of policy – the US still believes that plenty of Chinese companies are entangled with the nation's military and should not therefore be nourished with US capital – but instead reflects a clarification of some inconsistencies in the two presidential executive orders that investors found confusing.
[10]
But the effect is that US investors can keep their cash in Chinese companies, and bank dividends – but not re-invest those dividends in more scrip. And sale of shares is impossible after June 3, meaning investors can't cash out.
That last requirement means many investors will have sold their securities, as losing the option to liquify a position is not a good idea. But the FAQ also means that US investors can hold their shares in the hope that US-China relations eventually return to a friendlier footing. ®
Get our [11]Tech Resources
[1] https://www.federalregister.gov/documents/2020/11/17/2020-25459/addressing-the-threat-from-securities-investments-that-finance-communist-chinese-military-companies
[2] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/06/03/executive-order-on-addressing-the-threat-from-securities-investments-that-finance-certain-companies-of-the-peoples-republic-of-china/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-06-01
[7] https://www.theregister.com/2022/06/01/india_china_zte_vivo_probe/
[8] https://www.theregister.com/2022/05/30/shanghai_lockdowns_to_end/
[9] https://www.theregister.com/2022/05/27/chinas_semisecret_list_of_techs/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://whitepapers.theregister.com/
The ban was first imposed by president Donald Trump with a 2020 [1]executive order that forbade US-based individuals or entities owning shares in private Chinese companies identified as offering support to China's military, intelligence, and security agencies, by auditing their "development and modernization."
President Biden later issued a [2]similar order of his own.
[3]
Both documents named Huawei, server-maker to the stars Inspur, China's top chipmaker SMIC, and controversial video camera maker Hikvision as verboten to US investors, along with many other Chinese companies.
[4]
[5]
Trump's order set a divestment deadline of January 11, 2021, but Biden's order extended the deadline to June 3, 2022.
Two days before that deadline, the Office of Foreign Assets Control updated its [6]FAQ with instructions that US investors can still receive dividends from the named Chinese companies and are not required to divest shares.
[7]India probes ZTE and Vivo over finances, sparking Chinese protests
[8]Shanghai lockdowns to end, perhaps easing tech supply chain woes
[9]Revealed: The semi-secret list of techs Beijing really really wishes it didn't have to import
Buying more shares remains forbidden, and US entities are not allowed to facilitate such trades.
The Register understands the updated FAQ does not represent a softening of policy – the US still believes that plenty of Chinese companies are entangled with the nation's military and should not therefore be nourished with US capital – but instead reflects a clarification of some inconsistencies in the two presidential executive orders that investors found confusing.
[10]
But the effect is that US investors can keep their cash in Chinese companies, and bank dividends – but not re-invest those dividends in more scrip. And sale of shares is impossible after June 3, meaning investors can't cash out.
That last requirement means many investors will have sold their securities, as losing the option to liquify a position is not a good idea. But the FAQ also means that US investors can hold their shares in the hope that US-China relations eventually return to a friendlier footing. ®
Get our [11]Tech Resources
[1] https://www.federalregister.gov/documents/2020/11/17/2020-25459/addressing-the-threat-from-securities-investments-that-finance-communist-chinese-military-companies
[2] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/06/03/executive-order-on-addressing-the-threat-from-securities-investments-that-finance-certain-companies-of-the-peoples-republic-of-china/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://home.treasury.gov/policy-issues/financial-sanctions/faqs/added/2022-06-01
[7] https://www.theregister.com/2022/06/01/india_china_zte_vivo_probe/
[8] https://www.theregister.com/2022/05/30/shanghai_lockdowns_to_end/
[9] https://www.theregister.com/2022/05/27/chinas_semisecret_list_of_techs/
[10] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Yp8hxztWXWEw83pdpvQxXAAAAFM&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[11] https://whitepapers.theregister.com/
Re: Old old, song -- surely we need somthing new?
Kabukiwookie
The 'West' is 'lead' by a demented idiot and his cackling token side-kick.
This reflects both the moral, economic and intellectual state of most countries that would call themselves part of the 'West'.
Other more lean and more efficiently lead countries are eating our lunch and we (I consider myself part of the 'West') seem to hang on to hubris while clinging on to an era of prosperity that is now gone.
Sadly the 'West' is itself responsible for this downfall due to this hubris, along with greed and globalisation where the 'West' has literally sold the rope with which it will be hanged.
Old old, song -- surely we need somthing new?
There are innumerable companies in the US that "have ties to the military", its just a fact of life, so the constant banging of the drum about 'companies that have ties to the Chinese military' is getting a bit lame. Our government has to do this because its only by using some kind of National Security wormhole that they can have a hope of ducking the investor backlash (and lawsuits).
Americans on the whole don't like to be continually told what to do. They also don't like being taken for a ride. Either we're at war with China or we're not -- or, to use the vernacular, 'crap or get off the pot'.
(I grumble about this sort of thing a lot because it seems that (increasingly) meaningless gestures are our only growth industry. If we spent as much energy -- and money -- actually competing with them then I'd be being it 100%. But what we're setting ourselves up for is lose/lose.)