Major US indices that produce and maintain stock market indexes have removed dozens of Chinese firms from their lists. The move follows a US decision last month to ban investment in Chinese companies deemed to have links with China's military-industrial complex.
The S&P Dow Jones Indices has said that it will remove 25 Chinese firms from August 2021. Another index publisher FTSE Russell said that from late this month it will remove an additional 20 Chinese companies.
Firms to be removed from the indices include subsidiaries of the state-owned Aviation Industry Corporation of China (AVIC), the China North Industries Corporation (Norinco), the China State Shipbuilding Corporation (CSSC), and the China Aerospace Science and Technology Corporation (CASC).
On 3 June US President Joe Biden introduced an executive order (EO) that banned US investment in 59 entities designated as ‘Chinese Military-Industrial Complex Companies' (CMICs).
The White House said, “This EO allows the United States to prohibit – in a targeted and scoped manner – US investments in Chinese companies that undermine the security or democratic values of the United States and our allies.”
It added that the CMICs included those that are involved in “military, intelligence, and security research and development programmes, and weapons and related equipment production under [China's] military-civil fusion strategy”.
The Biden EO replaced a directive issued in November 2020 by the Trump administration that banned US investment in about 30 firms classified as ‘Communist Chinese Military Companies'.
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