Executive Order 14032-Addressing the Threat From Securities Investments That Finance Certain Companies of the People's Republic of China

On June 3, 2021, President Biden signed Executive Order 14032, updating and tightening the framework for addressing the national security threat posed by securities investments that finance certain companies of the People's Republic of China with ties to the Chinese military, intelligence, or surveillance sectors. The order superseded Executive Order 13959, which President Trump had issued in November 2020, refining the list of Chinese military-industrial complex companies in which U.S. persons were prohibited from investing and strengthening the legal and analytical framework for making such designations.

The order directed the Treasury Department to maintain and update a list of Chinese companies subject to the investment prohibition, establishing clearer criteria for designation based on companies' involvement in the defense and surveillance sectors of the Chinese economy. It authorized Treasury to add companies to the list if they are involved in defense or related materiel or services, are owned or controlled by the Chinese military or government, or operate in sectors identified as critical to Chinese military modernization. U.S. persons were given a wind-down period to divest from prohibited holdings.

This executive order reflected the bipartisan view that American capital should not be used to finance Chinese companies that directly support the People's Liberation Army's modernization and expansion or China's surveillance state. It sought to prevent U.S. investors from inadvertently supporting activities contrary to U.S. national security interests while maintaining a workable framework that provided clarity to financial markets.

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