This measure has affected firms such as Huawei, DJI and SMIC. The amended order will include companies operating in the defense or surveillance technology sectors.
US President Joe Biden plans to amend a US investment ban on companies linked to the Chinese military this week, after the Trump-era policy was challenged in court and left investors confused about its scope in the Subsidiaries, 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 defense and surveillance technology sectors, the people said. Until now, financial sanctions and targeting companies were linked to a Defense Department report ordered by Congress.
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The amended order, which Biden is expected to sign later this week, will change the criteria for listing entities to include those operating in the defense technology or surveillance sectors. Trump’s order targeted companies owned, controlled or affiliated with the Chinese military.
The Biden Administration would keep a large number of the previously listed entities and the Office of Foreign Assets Control will add new entities as part of the order, one of the people said. The Treasury would consult the State and Defense departments in the process.
Spokespersons for the White House and the Treasury Department did not respond to requests for comment.
After two Chinese companies successfully challenged the order, Biden’s team said a review of the policy was necessary to ensure it is legally sound and sustainable in the long term . By transferring responsibility to Treasury, Biden’s team aims to solidify the legal position of sanctions, one of the people said.
Some of the Chinese companies that have been affected by this measure are technology companies such as Huawei, the drone company DJI and SMIC, one of the main chip manufacturers.
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The ban review has been closely watched on Capitol Hill, where lawmakers crave a tougher stance on Beijing.
Biden’s position has also been scrutinized on Wall Street, where Trump caused confusion about whether the investment ban applied to a number of companies that may be connected, either as subsidiaries or with a similar name, to those on the list.
Amid the confusion, the Administration last month postponed a deadline to stop investments in subsidiaries, despite a ban on parent companies in effect since November.
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The White House and Treasury will also clarify that the bans apply to subsidiaries only if the Treasury lists them, the people said. The previous Administration also aimed to capture those companies whose names closely match the entities on the list.
