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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

Dec 2, 2020 - World

Biden says he won't immediately remove U.S. tariffs on China

President-elect Joe Biden during an event in Wilmington, Delaware, on Tuesday. Photo: Alex Wong/Getty Images

President Trump's 25% tariffs imposed on China under the phase one trade deal will remain in place at the start of the new administration, President-elect Biden said in an interview with the New York Times published early Wednesday.

Details: "I'm not going to make any immediate moves, and the same applies to the tariffs," Biden said. He plans to conduct a full review of the current U.S. policy on China and speak with key allies in Asia and Europe to "develop a coherent strategy," he said.

21 hours ago - World

Azar's UN remarks to take aim at China

Alex Azar during a White House Coronavirus Task Force press briefing. Photo credit: Tasos Katopodis/Getty Images

Secretary of Health and Human Services Alex Azar is expected to give a speech at a special session of the United Nations General Assembly on Thursday that hails U.S. progress on coronavirus vaccines while criticizing — though not directly naming — China.

Why it matters: U.S. government officials are concerned that China will use the UN special session to spread disinformation about the origins of the virus and China's early missteps in handling the pandemic.

What COVID-19 vaccine trials still need to do

Illustration: Sarah Grillo/Axios

COVID-19 vaccines are being developed at record speed, but some experts fear the accelerated regulatory process could interfere with ongoing research about the vaccines.

Why it matters: Even after the first COVID-19 vaccines are deployed, scientific questions will remain about how they are working and how to improve them.