The Trump administration has banned Americans from investing in China State Shipbuilding Corp (CSSC), China Shipbuilding Industry Corp (CSIC) and Sinochem because of their links to the Chinese military.
US individuals and companies will not be allowed to own securities — including shares and bonds — directly or through funds in the “Communist Chinese military companies”, President Donald Trump said in an executive order.
According to the US Department of Defense, CSSC, CSIC, Sinochem and 28 others are deemed such companies currently.
“I have issued an executive order declaring a national emergency to deal with the threat posed by the People’s Republic of China’s [PRC’s] increasing exploitation of US capital to resource and to enable the development and modernisation of its military, intelligence, and other security apparatuses,” Trump said.
The capital allows China to threaten the US homeland and American forces overseas by developing and deploying “weapons of mass destruction, advanced conventional weapons, and malicious cyber-enabled actions”, Trump added.
The executive order is Trump’s first major action directed at China since he was projected to lose the US presidential election to Democratic challenger Joe Biden in early November.
The Washington Post reported that political analysts expect little change in policy under Biden, citing widespread frustration with China’s trade and human rights records and alleged spying and technology theft.
‘Military-Civil Fusion’
The order will come into force on 11 January. US investors have a grace period of one year to comply with the rules.
In 2019, CSSC formally absorbed CSIC in a merger initiated by the Chinese government to create a mega-yard group.
CSSC is now the world’s largest builder of merchant vessels by sales and orderbook through group yards including Shanghai Waigaoqiao Shipbuilding, Hudong-Zhonghua Shipbuilding and Dalian Shipbuilding Industry.
The group also constructs frigates, destroyers, submarines and aircraft carriers for the People's Liberation Army Navy.
“Through the national strategy of Military-Civil Fusion, the PRC increases the size of the country’s military-industrial complex by compelling civilian Chinese companies to support its military and intelligence activities,” Trump said.
Wholly owned by the Chinese government, CSSC has nine subsidiaries listed on public exchanges.
They are China Shipbuilding Industry, China CSSC Holdings, CSSC Offshore & Marine Engineering, China Shipbuilding Industry Group Power, China Marine Information Electronics, China Harzone, CSSC Science & Technology and Hubei Jiuzhiyang Infrared System, listed in Shanghai, and CSSC (Hong Kong) Shipping, listed in Hong Kong.
Sinochem, also owned by the government, previously operated a large chemical tanker fleet through direct ownership and joint ventures.
The shipping assets were disposed to Inner Mongolia’s privately owned Junzheng Group last year. But Sinochem has remained one of the largest dirty tanker charterers in tonnage terms.
