It lingers on. In the dying weeks of Donald Trump’s presidency, the diplomatic standoff between the United States and China continued with financial sanctions and support for Taiwan.
The double whammy has left Beijing furious after Washington rolled out a US investment ban on Chinese companies with links to the People’s Liberation Army or PLA.
“American capital should not be used to finance the construction of Chinese Communist weapons literally aimed at killing Americans and driving the US military out of Asia,” Peter Navarro, the director of the White House Office of Trade and Manufacturing Policy, said.
“This strong action by President Trump puts a stop to that Wall Street insanity,” he added after the White House issued the executive order.
Up to 31 Chinese companies identified by the US Defense Department are on the new investment blacklist. They include state-run telecom giants, such as China Mobile, China Unicom and China Telecomm, as well as 5G powerhouse Huawei.
Also listed are Beijing-controlled Sinochem Group, a chemicals and fertilizer conglomerate, with close connections with the PLA, transport juggernaut China Railway Construction Corporation and surveillance group Hikvision Digital Technology.
During a media briefing, Navarro revealed that at least US$500 billion in market capitalization was “represented” by these blacklisted Chinese companies and their subsidiaries.
“This is a sweeping order designed to choke off American capital to China’s militarization,” he said.
The markets reacted quickly to the decision with shares in China Telecom and China Unicom falling around 7%.
In response, President Xi Jinping’s administration launched a scathing attack.
“The US government, out of political motives, has been stigmatizing and discrediting China’s policy of military-civilian integration. Its state power has been abused to repress Chinese enterprises without cause,” Wang Wenbin, a spokesman for the Ministry of Foreign Affairs, told a media conference.
As news trickled in of the investment ban, US Secretary of State Mike Pompeo created a furor in Beijing when he said in an American radio interview that Taiwan “has not been a part of China.”
“That was recognized with the work that the [Ronald] Reagan administration did to lay out the policies that the United States has adhered to now for three-and-a-half decades,” he added.
His comments followed Washington’s planned $7 billion advanced arms deal with Taiwan after last year’s $8 billion agreement for military hardware which left Beijing furious.
Even though the island is a beacon of democracy in China’s backyard, it is still classified as a “renegade province” by the unelected elite on the mainland.
Using force to reunite Taiwan with the “motherland” has not been ruled out by China’s ruling Communist Party.
“We solemnly tell Pompeo and his ilk, that any behavior that undermines China’s core interests and interferes with China’s domestic affairs will be met with a resolute counterattack by China,” Foreign Ministry spokesman Wang said at a regular briefing without elaborating.