The US Treasury has delayed the implementation of a ban on Americans investing in companies with suspected ties to the Chinese military, which had been imposed by Donald Trump after he lost the presidential election.
Mr Trump in November issued an executive order that prohibited Americans from investing in Chinese companies named on a Pentagon blacklist of groups that might threaten US security. The Trump administration set a January 28 deadline for the ban to take effect, but the Biden administration on Wednesday said it would extend the date to May 27.
The move comes as the Biden administration starts the process of reviewing actions that Mr Trump last year took against China, including putting a number of Chinese companies on Pentagon and commerce department blacklists that either ban investments in those companies or make it harder to export technology to them.
Daniel Tannebaum, a former Treasury official, said the extension would give Joe Biden’s team time to assess the policy and try to remove some of the confusion that arose during the final weeks of the Trump administration. The Treasury’s Office of Foreign Assets Control granted the extension by issuing what it calls a “general licence” on Wednesday.
“It gives the new administration time to potentially clean up an action that created significant market confusion. General licences are a common method of tweaking sanctions programmes after their implementation to manage against initial unanticipated consequences,” said Mr Tannebaum, a sanctions expert and partner at Oliver Wyman.
Jen Psaki, the White House press secretary, this week said the new Biden administration was conducting a series of “complex reviews” of Mr Trump’s China-related policies, but would proceed with “an approach of patience”, suggesting it would take some time before the new team decided which measures would be kept and which would be amended or reversed.
“That means we’re going to have consultations with our allies, we’re going to have consultations with Democrats and Republicans, and we’re going to allow the inter-agency process to work its way through to review and assess how we should move forward with our relationship,” Ms Psaki said on Monday.
Investors have been confused about the scope of the US government prohibition on investing in certain Chinese companies, partly because the Trump administration struggled to explain its own policy during its final weeks in office.
Inside the Trump administration, Steven Mnuchin, the Treasury secretary who was viewed as less hawkish on China, fought a number of battles with Mike Pompeo, secretary of state, and the Pentagon, which advocated for tougher action.
While Mr Mnuchin lost a battle to exclude the subsidiaries of the Chinese companies on the Pentagon list from the ban, he successfully pushed back against a move to include Alibaba, the Chinese ecommerce company, and Baidu, the Chinese search engine, on the defence department’s blacklist.