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Photo: Kevin Frayer via Getty

President Trump signed an executive order Thursday prohibiting American companies and individuals from owning shares in any of the 31 Chinese companies previously listed as enabling the People’s Liberation Army, effective Jan. 11.

Why it matters: Many of these companies trade on U.S. exchanges and are sometimes purchased by American investors as part of mutual funds. It’s unclear what effect Trump’s latest sanctions could have on the markets.

The state of play: The People’s Liberation Army is a threat to the U.S. and is “increasingly exploiting United States capital” to gain an edge in its military-industrial complex, the order says.

  • The order prohibits direct ownership of shares and investments in market funds that include the Chinese firms.
  • Investors have until November 2021 to divest.
  • Among the blacklisted companies are China Mobile Communications, China Electronics Corporation and China Telecommunications Corp. They join Huawei, Hangzhou Hikvision and more on the Defense Department's list of Chinese military-linked companies.

What they're saying: "It establishes the principle that American capital shall not fund Chinese militarization," Trump's trade advisor Peter Navarro said in a press call. "This practice of basically financing the bonds of companies that are building the missiles to sink our ships is again the worst kind of Wall Street insanity that President Trump is putting a stop to today."

  • The order has support on the Hill. "American money and intellectual property shouldn't do our adversaries' work for them," Nebraska Sen. Ben Sasse, a China critic, said in a statement to Axios.

The other side: A spokesman for Hikvision told Axios, "As we have shown time and again, Hikvision is not a 'Chinese military company.' Hikvision is independently operated and publicly traded ... These punitive actions against the company do not make America, or the world, any safer."

The big picture: The Trump administration has taken aggressive steps to ratchet up pressure on China over the last year, as tensions between the world's two largest economies reach new highs in the face of the coronavirus pandemic, the trade war, China's crackdown on Hong Kong, human rights abuses in Xinjiang and more.

Yes, but: President-elect Joe Biden could undo the executive order and other bans once he is sworn into office.

Go deeper: Trump leaves Biden tough choices for his own China playbook

Go deeper

China to stop recognizing special U.K. passport for Hong Kong residents

A person holds up a British National (Overseas) passport in Hong Kong. Photo: Anthony Wallace/AFP via Getty Images

China will no longer recognize the British National Overseas passport as a valid travel document or proof of identity, Foreign Ministry spokesperson Zhao Lijian said Friday.

Why it matters: The announcement comes amid heightened tensions with the United Kingdom over its plan to offer potentially millions of Hong Kong residents a path to residency, and eventual citizenship.

Mike Allen, author of AM
3 hours ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."