President Trump signed an executive order on Thursday, Nov. 12, prohibiting Chinese civilian companies with connections to the Chinese Communist Party (CCP) military from being listed on the U.S. stock exchange. This is to prevent local investors from providing funds to these firms through passive institutional investment vehicles, and unknowingly collaborating with the development of the CCP’s military and intelligence apparatus.

The aim of the order is to ensure that the large number of Chinese companies connected to its army and intelligence apparatus are not financed by private U.S. capital.

President Trump was very decisive in his executive order, “The People’s Republic of China (PRC) is increasingly exploiting U.S. capital to obtain resources and to allow the development and modernization of its military, intelligence, and security apparatus. This is causing the People’s Republic of China [the CCP] to directly threaten the homeland of the United States and U.S. forces abroad.”

Large and popular Chinese companies will be strongly affected by this new arrangement, including 31 telecommunications companies, among which are Huawei, China Telecom, China Mobile, surveillance equipment manufacturer Hikvision and Sinochem, considered crucial to the modernization of the Chinese People’s Liberation Army (PLA).

In addition, about 210 Chinese companies with a combined market capitalization of about US$2 billion will be affected, and began trading on major U.S. stock exchanges from October.

According to the statement, the U.S. Department of Defense will be in charge of defining and detailing the companies that are backed by the Chinese military. 

Local investors who hold securities acquired between January 11, 2011 and today will have time until Nov. 11, 2021 to sell them.

Trump’s national security adviser, Robert O’Brien, said in a statement on Thursday that the action “serves to protect American investors from the unwitting injection of capital to enhance the capabilities” of the CCP’s intelligence services.

The Trump administration has been working and taking concrete action to break down mechanisms that the CCP has used for many years to grow its military power at the expense of U.S. funding. 

For years, the key to the development of the CCP’s military, intelligence, and other security apparatus was linked to the large, apparently private, Chinese economy. Using a nationwide strategy of military-civilian fusion, the CCP is increasing the size of the country’s military-industrial complex by forcing Chinese civilian companies to support its military and intelligence activities.

These companies, although apparently private and civilian, participate in trade on a global scale, often actively trading on the stock exchanges of the strongest countries, such as the United States. 

President Trump’s initiatives are aimed at identifying these firms and not allowing local private capital to unwittingly support the military, intelligence, and security apparatuses of the CCP by assisting in its development and modernization.