U.S. President Biden on Tuesday extended a Trump-era national emergency rule, banning U.S. firms from investing in Chinese military-linked companies.

According to a statement from the White House, the President said, “The PRC [People’s Republic of China] is increasingly exploiting United States capital to resource and to enable the development and modernization of its military, intelligence, and other security apparatuses, which continues to allow the PRC to directly threaten the United States homeland and United States forces overseas.” 

He added, “The [People’s Republic of China] military-industrial complex … continues to constitute an unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, and economy of the United States.”

Former President Donald Trump issued an executive order in November 2020 to prohibit investment in Chinese firms connected to its military. The ruling cited threats to national security and declared a national emergency.

President Biden expanded President Trump’s order in June 2021 and added surveillance industries to the ban, along with those firms with Chinese military ties.

In recent years, the U.S. has put many Chinese companies on the restriction list. 

The most prominent case is Huawei.

The U.S. placed Huawei on the blacklist in 2019, banning them from buying American technology without a U.S. government license due to national security concerns.

In 2020, more restrictions were placed on Chinese giant tech, particularly export curbs on semiconductors

Under the sanction, Huawei will struggle to maintain its top smartphone market position as it will heavily depend on sales in China. 

Last year, its revenue dropped nearly 30%, losing the world’s largest telecom equipment maker and smartphone sellers.

Last month, The U.S. Federal Communications Commission planned to ban the approval of new Huawei and ZTE telecommunications devices and some video surveillance equipment sales from three other Chinese companies for national security concerns.

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