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Go back over the past four years when Donald Trump was President. Day after day, week after week, year after year, the mainstream media “news” was that market gyrations had nothing to do with economic fundamentals, interest rates, or manipulation. Instead, it was Trump’s “Trade War” with China that swayed equities.
Now, with Joe Biden running the show, while the game is the same, there is no media backlash from his continuation of Trump’s China policies… even when they are more restrictive.
Indeed, the Trends Journal has reported extensively on the Biden administration’s effort to hold an edge over China for the next decade and how they announced a special task force to make sure it happens. (See our 16 February article, “CHINA TASK FORCE: U.S. APPROACH TO BEIJING.”)
The Financial Times reported on Friday that President Biden’s team announced the ban on Americans from investing in 59 Chinese companies in the defense and surveillance technology sectors.
Biden’s ban is an amendment to Trump’s order that had listed 48 Chinese firms U.S. investors were prohibited to invest in.
In a news briefing, Wang Wenbin, a spokesman for China’s Foreign Ministry, said Washington’s actions are an abuse of state power that “unscrupulously suppressed and restricted Chinese companies.”
Payback’s a Bitch
Wang said the U.S. was in violation of the rule of law and that “China will take necessary measures to firmly safeguard Chinese enterprises’ legitimate rights and interests and support them in defending their rights and interests according to law.”
Among the blacklisted companies are Huawei, Semiconductor Manufacturing International Corporation, Hikvision, Aero Engine Corporation of China, Aerosun, and Fujian Torch Electron Technology. Washington said some of the companies have close ties to the Chinese military, and the administration said the U.S. investments could be used by China to undermine national security, the paper reported.
“With no justification for previous lists, the U.S. government keeps finding creative ways to continue targeting Hikvision simply because we happen to be headquartered in China,” said a spokesman for the company, according to Bloomberg.
Fight for Market Power
U.S. officials said Americans will be able to divest shares in these companies over the next year, but once the timeframe ends, they will not be allowed to sell their shares.
A senior official told the FT:
“The new executive order signals the administration’s intent to sustain and build on prohibitions on Chinese defense companies in order to ensure that U.S. persons are not financing the military-industrial complex of the People’s Republic of China…
The prohibitions are intentionally targeted and scoped to maximize the impact on the targets while minimizing harm to global markets.”
In issuing the executive order last Thursday, which is expected to take effect on 2 August, President Biden said,
“I find that the use of Chinese surveillance technology outside the PRC [People’s Republic of China] and the development or use of Chinese surveillance technology to facilitate repression or serious human rights abuse constitute unusual and extraordinary threats.”
TREND FORECAST: As we have forecast, despite the U.S. spending more on defense each year, which is more than the next ten highest-spending countries combined – and not having won a war since World War II – it would not defeat China in a military conflict.
Indeed, after launching and fighting the 21st-century Afghan, Iraq, Libyan, Syrian, and Yemen wars and conflicts, the bottom line is defeat: trillions spent and millions killed.
Understanding its limited military capabilities, Reuters reported that Kurt Campbell, the Indo-Pacific policy coordinator under Biden, said in May that the period of engagement with Beijing is over and will now be one of economic competition.
As we have forecast, in this and previous issues of the Trends Journal, with China overtaking America as the world’s #1 economy in the next several years – and the business of China being business – the greater China’s economic strength, the stronger the U.S. will clamp down with trade war measures.