There was widespread expectation, and concern on the part of the Republican Party, that Joe Biden would be soft on China during his presidency. However, the US President has been more hawkish than many anticipated.
As tensions between the US and China continue to play out under the Biden administration, investors with exposure to Chinese stocks could have cause for concern. Since taking up his position in the Oval Office earlier in the year, the president described China as an assertive competitor to the open international system and has subsequently blacklisted stocks deemed to be a security risk.
On Thursday the Commerce Department added seven Chinese supercomputing organisations to a blacklist because of national security fears. Among the entities added to the list were: Tianjin Phytium Information Technology, Shanghai High-Performance Integrated Circuit Design Center, Sunway Microelectronics, the National Supercomputing Center Jinan, the National Supercomputing Center Shenzhen, the National Supercomputing Center Wuxi and the National Supercomputing Center Zhengzhou.
The seven entities were placed on the blacklist because they built supercomputers used by Chinese military actors, engaged in destabilising military modernisation efforts, and/or weapons of mass destruction programmes, according to the US government.
It is an accusation that has long been waged against China, which totally denies it is conducting these form of industrial espionage.
“Supercomputing capabilities are vital for the development of many – perhaps almost all – modern weapons and national security systems, such as nuclear weapons and hypersonic weapons,” U.S. Secretary of Commerce Gina Raimondo wrote in a statement.
“The Department of Commerce will use the full extent of its authorities to prevent China from leveraging U.S. technologies to support these destabilizing military modernization efforts,” she added.
Towards the end of his tenure, Donald Trump signed a law stating that foreign companies will not be listed on a US exchange if they do not cooperate with audits for three consecutive years from the US Public Accounting Oversight Board.
According to records on the boards website, there were 300 examples where inspections were denied. The vast majority were by Chinese companies, including Alibaba and Baidu, that are listed in America.
However, despite the growing tensions, and America’s forceful approach, 30 companies based in China were listed on the US stock exchange in 2020.
